GWS’ Rebalancing Process Targets Tax-Efficiency

A key premise to the success of the Paritas Global Wealth Strategy is that small changes in the portfolio’s allocation can, over time, potentially enhance its total return. Collectively, all these small changes allow us to rebalance the risk every month while still efficiently minimizing the impact of taxes.
For every trade that occurs in GWS, we utilize an automated tax lot selection system that identifies the most favorable lot for each portfolio holding. The chart below depicts the priority of the tax lots that can help us minimize the tax impact:

Historically, the turnover of the GWS portfolio has been in-line with many traditional balanced portfolios. Our systematic monthly rebalancing affects a small portion of the portfolios’ value, but does involve typically small adjustments to its 44 positions. It is highly unlikely that any one position in the portfolio would ever be completely sold.
The goal of our deliberate and careful approach is to build up unrealized long-term gains while realizing short-term losses whenever possible.

About the author: Michael Pakula