1Tax loss harvesting is a process designed to reduce capital gains taxes owed from selling profitable investments. Tax gain harvesting, as opposed to tax loss harvesting, is a process of turning unrealized long term capital gains into realized capital gains at a specific time for tax purposes. Tax transitioning is designed to spread out and help mitigate the tax consequences of the phased transitioning of an account to the target strategy over a period of time.
There’s no guarantee that a particular investor will realize significant tax benefits from harvesting gains or losses. Investment strategies that seek to employ tax management may be unable to fully realize strategic gains or harvest losses due to various factors. Market conditions and/or client account holdings may limit the ability to generate tax losses. Tax-loss harvesting involves the risks that the new investment could perform worse than the original investment and that transaction costs could offset the tax benefit. Also, a tax-managed strategy may cause a client portfolio to hold a non-benchmark security in order to achieve more favorable tax treatment or to sell a benchmark security in order to create tax losses. The ability to minimize tax consequences for a specific account may decrease as gains have the potential to accumulate over a period of time. Investors in lower tax brackets generally will not derive the same level of potential tax benefits from tax-managed strategies than those in higher tax brackets. Tax considerations, while important, are just one factor to consider before making any investment decision. Tax-managed investing and tax transitioning do not equate to comprehensive tax advice, are limited in scope and not designed to eliminate taxes in an account. Please consult your own tax advisor or financial professional for more detailed information on tax issues as they relate to your specific situation.
2As of June 2023, the only target index available is the S&P 500® Index.
For professional use only. Not intended for use by the general public. Pershing LLC and Pershing X, Inc. do not provide investment advice. Mellon is a division of Mellon Investments Corporation (MIC), a registered investment adviser. MIC provides day-to-day investment advisory services in connection with the product.
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