By adding a long/short extension to a core equity portfolio, Quantinno may provide a structural advantage that allows for more significant and consistent tax benefits, regardless of market direction. As some stocks held long lose value when markets fall and some stocks held short will lose value when markets rise, a long/short approach may allow for larger and more consistent tax benefits than a typical approach to tax-loss harvesting. Traditional long-only tax-loss harvesting relies on down markets to be impactful. When the market depreciates in value, then traditional long-only strategies are able to generate a significant benefit. When the market appreciates, however, the ability to generate losses dissipates over time. With long/short tax-loss harvesting, losses can be harvested in any market environment.
