Wall Street Takes Tax-Loss Harvesting to a Powerful New Level

What do you get the wealthy client who has everything?

The answer, if you’re a clever money manager, is a loss-making investment.

That’s the thinking behind Wall Street’s latest innovation, a cunning spin on the famous tax-loss harvesting which has been a controversial feature of wealth management for decades.

Tax-loss harvesting is the strategy of selling losing investments to offset the tax owed on gains realized elsewhere in a portfolio. It’s a powerful tool deployed often in equity holdings, but it has a key limitation: An investor doesn’t always have losses to harvest. That can be especially true in a US stock ...