July 5, 2005

Tax-Loss Harvesting Grows

Client requests prompt more managers to harvest losses, MMI survey finds

A survey by the trade group for the separate account industry--the Money Management Institute--and Financial Research Corp. has found that more of its investment manager members are using tax-loss harvesting, prompted by end-client requests, and are doing so regardless of the overall market environment. In the MMI Tax-Loss Harvesting Survey, 73% of respondents reported an increase in tax-loss harvesting over the past three years, and 43% reported no "significant difference" in using tax-loss harvesting "in positive markets compared with negative markets." More than 70% of the managers said they use third-party systems to track and execute these strategies, while 20% only use proprietary systems of their own making. This is the first time MMI has asked members about their tax-loss harvesting activities, though a spokesman for the group said that a follow-up survey may be conducted in 18 to 24 months.
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