In Pursuit of the Perfect Portfolio: The Stories, Voices, and Key Insights of the Pioneers Who Shaped the Way We Invest by Andrew H. Lo and Stephen R. Foerster
In Pursuit of the Perfect Portfolio examines this question by profiling and interviewing ten of the most prominent figures in the finance world—Jack Bogle, Charley Ellis, Gene Fama, Marty Leibowitz, Harry Markowitz, Bob Merton, Myron Scholes, Bill Sharpe, Bob Shiller, and Jeremy Siegel. We learn about the personal and intellectual journeys of these luminaries— …
The one insight I got out of this is that there may be some tax advantage to building your own index fund (e.g., rather the hold the Vanguard Total Stock Market Index, buy six or more of the constituent asset classes in the proper proportions and assemble your own. For example, buy a Large Cap, Mid Cap and Small Cap Value Fund and well as a Large Cap, Mid Cap and Small Cap Growth Fund.) As these investment themes fall in and out of fashion, you may have an opportunity to do some tax loss harvesting in the individual mutual funds that is lost in the aggregate if you choose the ease of one-fund investing.
intercst:" For example, buy a Large Cap, Mid Cap and Small Cap Value Fund and well as a Large Cap, Mid Cap and Small Cap Growth Fund.) As these investment themes fall in and out of fashion, you may have an opportunity to do some tax loss harvesting in the individual mutual funds that is lost in the aggregate if you choose the ease of one-fund investing.
And who doesn’t like lower taxes? "
if you do this in a taxable account…you ‘might’ get some tax loss harvesting…but if everyone bails out of , say, small caps, and your fund manager has to sell a bunch of it…you can also get hit with large capital gains distribution tax at the end of the year since they had to sell appreciated assets to let everyone bail out.
Worse if you buy sector funds like ESG, biofuels, oil/gas, etc, and they fall out of favor, or there’s a mass market withdrawal.
if you do this in a taxable account…you ‘might’ get some tax loss harvesting…but if everyone bails out of , say, small caps, and your fund manager has to sell a bunch of it…you can also get hit with large capital gains distribution tax at the end of the year since they had to sell appreciated assets to let everyone bail out.
That’s true, but you need to look at amount of unrealized capital gains in the fund, and it’s annual turnover. Index funds tend to be able to manage large shareholder withdrawals without incurring unwanted capital gains distributions on the investors that remain. Moreso if the mutual fund is paired with an ETF and you can channel the capital gains distributions to the ETF side of the ledger.
As these investment themes fall in and out of fashion, you may have an opportunity to do some tax loss harvesting in the individual mutual funds…
Wouldn’t you want to do the opposite (buy low, sell high)? Rebalancing would call for trimming the funds that went up and adding to those that went down.
Wouldn’t you want to do the opposite (buy low, sell high)? Rebalancing would call for trimming the funds that went up and adding to those that went down.
Tax loss harvest first, then 31 days later rebalance.
Wouldn’t you want to do the opposite (buy low, sell high)? Rebalancing would call for trimming the funds that went up and adding to those that went down. — Tax loss harvest first, then 31 days later rebalance.
Sorry - IP is correct. These have not been kept up to date and all the links are shot. At the time the article was written, the proportions of funds making up each portfolio were posted and the philosophy made sense. What is left is nothing but an introductory index page. Long story made short, it offered a number of parallel approaches which conformed to what this thread is promoting, but the content has been eaten by the Marketwatch gods.