OUR INVESTMENT PHILOSOPHY
We believe tax alpha can provide a significant source of potential value for taxable investors. We build economically substantive portfolios, structures, and decision frameworks focused on achieving optimal after-tax outcomes.
THE CLIENT DOES NOT JUST OWN A PORTFOLIO. THEY OWN A TAX-SENSITIVE BALANCE SHEET.
Every legacy holding, entity, trust, and tax lot carries a story – and often a tax consequence.
Historically, the asset & wealth management industry was focused primarily on pre-tax returns. After-tax returns were an afterthought – a planning topic separate from the “real” work of asset allocation, manager research, and security selection. We believe there is a better framework for taxable investors. A taxable investor does not just own a portfolio – he or she owns a tax-sensitive balance sheet. This tax-sensitive balance sheet might include concentrated equity positions, legacy mutual funds, private market positions, business interests, real estate, trusts, qualified accounts, and donor-advised funds. Each and every asset has both an investment job and a tax job. The traditional asset & wealth management industry was built to manage only the first – the latter is where tax alpha lives, often unrealized.
EVERY SINGLE TAXABLE INVESTOR EATS AFTER-TAX, NOT PRE-TAX RETURNS.
Every legacy holding, every entity, every trust, every tax lot carries a story – and often a tax consequence. The role of a tax-aware advisor is to help manage our client’s entire balance sheet and orchestrate specific outcomes: optimizing for both pre-tax and after-tax returns, liquidity, control, and family intent – all at the same time.
TAX ALPHA IS ONE OF THE MOST DURABLE FORMS OF INVESTMENT ALPHA.
For some taxable investors, tax drag may exceed investment management and advisory fees.
The process of optimizing for after-tax outcomes – seeking tax alpha – has the potential to create value regardless of market environment. By balancing economic substance with thoughtful gain deferral and loss realization, taxable investors may create a reliable source of value beyond pre-tax investment returns. Tax alpha has the potential to compound quietly, year after year, on top of whatever the underlying portfolio delivers – and the after-tax dollar value of that compounding, on a sufficiently large taxable portfolio, may significantly exceed the fees the investor pays for investment management and advisory services. Most of the wealth management industry treats this as a footnote. We treat it as the foundation.
THE WRONG QUESTION IS: “HOW DO WE MINIMIZE TAXES?”
The right question is: “How do we build economically substantive structures which deliver optimal after-tax outcomes?”
Starting with investment rationale, then optimizing for after-tax outcomes is the right way to implement a tax-aware investment structure. A structure focused on investment rationale first is robust. If the pre-tax investment case makes sense, then the structure has a much higher likelihood of investment success even without the tax benefits. This creates a healthy, economically substantive environment for optimizing for after-tax outcomes.
Minimizing taxes means trying to pay as little as possible. This logic – taken to the extreme – has the potential to create an environment where investors contort their capital allocation, often resulting in investment losses, purely for the sake of minimizing taxes.
Optimizing for after-tax outcomes is a completely different posture – we accept that taxes will be paid, and ask which taxes, when, and in service of what. The full set of potential actions becomes available: defer, realize, offset, donate, hedge. A tax-aware decision is not “no tax.” It is a multifaceted decision about which taxes are worth paying and when.
Defer
Realize
Offset
Donate
Hedge
OUR CAPABILITIES
The tax-aware investing toolkit has greatly expanded, and access has been democratized in recent years. Complexity has also grown. No single tool solves the whole problem, and the right answer is almost always a combination, thoughtfully sequenced over time in alignment with an investor’s unique goals, objectives, and needs.
Long-Short Tax-Aware Investing
We evaluate and implement long-short tax-aware separately managed accounts (SMAs) that pair broad equity exposure with systematic tax-loss realization. Key considerations: benchmark selection, leverage levels (130/30 through 350/250), tracking error budgets, and funding mechanics. These strategies serve as a powerful portfolio building block for families seeking both pre-tax alpha potential and meaningful tax efficiency.
Trader Hedge Funds
Trader hedge funds offer a structurally different tax profile than traditional hedge fund vehicles. Through long-standing relationships, we help clients access institutional-quality trader hedge fund strategies – delivering both strategy access and fee alpha where possible.
Section 351 Exchanges
For clients with significant embedded gains in concentrated positions, Section 351 exchanges can enable tax-deferred diversification into a controlled corporation structure. We help educate investors on how 351s work, evaluate where 351s fit, and structure them in coordination with ETF specialists.
Concentrated Stock Management
A comprehensive toolkit for managing single-stock concentration: staged sales, 10b5-1 plans, hedging structures (collars, variable prepaid forwards, options-based strategies), exchange funds, charitable transfers, and the sequencing that ties them together. This is one of our deepest specialties and the focus of much of our research and work.
Box Spread Borrowing
A tax-aware borrowing tool using options. For certain clients, box spreads offer borrowing rates close to the risk-free rate, with potentially deductible interest expense. This form of tax-aware borrowing can be more efficient and lower cost than traditional margin or securities-backed lines of credit.
ETF Innovation
Drawing on direct experience building and launching multiple derivatives-based and alternative ETFs at firms such as Simplify Asset Management, we bring practitioner-grade fluency in ETF mechanics, tax efficiency, and structure. We incorporate innovative ETF solutions where they enhance liquidity, transparency, or cost efficiency for clients – and we know how to evaluate the ones that do not.
Private Markets Access and Liquidity
We maintain relationships across the venture and private equity ecosystem to source secondary allocations and provide diligence support. For existing private-market positions, we focus on liquidity planning, capital-call management, and tax-aware borrowing overlays so clients can maintain desired exposure without forced sales of public assets.
The right combination is specific to each family. We work through that combination with you, sequenced and calibrated to your situation.
READY TO TALK?
If this resonates, we would welcome a conversation. Click the button below to schedule a 30-minute introductory call.
Prefer to write? shang@dishmicap.com