The Latest Way the Rich Can Avoid Taxes

JPMorgan Asset Management is tapping into a booming market for wealthy investors with the launch of a private fund designed to maximize after-tax returns by generating losses. The J.P. Morgan Tax-Smart Disciplined Equity Long Short Strategy is said to take bullish positions in a basket of stocks while also betting against certain companies. The shorted names will ideally produce losses that the fund can then harvest to offset capital gains.

So-called tax-aware investing is quickly becoming one of the hottest trends in wealth management as the affluent seek to reduce their tax bills. A long-running bull market in US stocks has left many investors with massive unrealized gains and concentrated positions in specific names. Taking short positions to create losses which can then be used to offset gains elsewhere in the portfolio should theoretically lower an investor’s tax burden when the time comes to sell appreciated assets. —David E. Rovella