Tax-managed mutual funds are available for Canadian investors. To learn more, consult your financial advisor to determine if tax-managed mutual funds are suitable for your personal investment objectives and goals.
Tax-Managed Investing 101
New to the active tax management concept? Explore this page for the highlights.
What is active tax managed investing?
Active tax-managed investing is an investment approach aimed at minimizing tax drag and maximizing after-tax wealth.
This dynamic approach uses real-time, year-round techniques such as tax loss harvesting, minimizing wash sales, and tax-smart yield management to systematically target sources that may erode investment returns, while helping investors keep more of what they earn.
How does tax management help me?
Focuses on improving after-tax wealth
Seeks to minimize tax drag, helping you retain more earnings
Offers real-time, year-round techniques to optimize tax efficiency
Aims to reduce both capital gains & federal taxes
In a world where investors are fixated on a pre-tax investment perspective, after-tax investment value tends to be an afterthought.
Yet, the compounding tax drag nevertheless continues to weigh down portfolios and reduce returns. Fortunately, this perpetual problem has a systematic solution in the form of active tax management. Designed to target actual problems faced by investors, this dynamic approach carries out real-time, year-round measures aimed squarely at minimizing avoidable losses and maximizing after-tax wealth.
What tools are available to help illustrate tax drag?
FAQs
Non-registered accounts or assets are ideal for considering investing in tax-managed mutual funds. These unique mutual funds are designed to minimize the embedded year-end capital gain distributions that trigger capital gains taxes. This is important because these taxes can impact the value of a taxable portfolio.
In Canada, different types of distributions have different federal and provincial taxation levels. For example, capital gains are taxed at a lower level than interest income.
Tax-managed mutual funds aim to minimize or eliminate capital gain or dividend distributions, both of which are taxed. Using professionally-managed tax-managed mutual funds can help to minimize tax drag and help investors maximize their after-tax returns.
Our approach to tax-managed mutual fund includes the following strategies and techniques: active money management, centralized trading & implementation, tax-loss harvesting, minimizing superficial losses and gains realization, as well as tax-smart portfolio turnover, and managing a fund’s yield.
Our tax-managed solutions for Canadian investors draw on our 35+ years of experience with tax-managed solutions in the U.S. and more than a decade in Australia. Our approach includes techniques and strategies outlined in the next question in order to minimize taxable distributions.
Tax drag is the impact that investment taxes have on a portfolio.
Also known as tax-loss selling, tax-loss harvesting is the process of selling investments that are losing money to create a tax-loss, which can be used to offset capital gains made elsewhere in the fund’s portfolio, that otherwise would be paid as a distribution.
Tax-managed funds, particularly for non-registered assets (e.g. not in an RRSP or TFSA) in Canada are worth considering as they use sophisticated tax-management strategies and techniques which aim to minimize taxable distributions, such as capital gains. As with any investment, please consult your financial advisor to discuss suitability.