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business18h ago
Tax Day is here. How to pocket more of your portfolio's return, according to Bank of America
- Bank of America argues tax-aware investing can boost long-term after-tax returns versus tax-insensitive strategies.
- Investors should consider buybacks over dividends as a tax-friendly way to return cash.
- Municipal bonds can provide tax-exempt income at federal levels and possibly state taxes too.
- Consider high-yield munis for income, with funds like HYD and MUB cited as options.
- Direct exposure to MLPs can offer higher yields but brings tax complexity via K-1s.
- MLP distributions are treated as a return of capital, affecting cost basis for investors.
- Investors should be aware that fund-level taxation differs from direct MLP ownership.
- The report compares a 60/40 portfolio under two tax regimes to illustrate tax alpha.
- The Bank of America analysis suggests tax efficiency can help in a climate of AI spend and buyback changes.
- Investors can use specific ETFs as examples for tax-efficient exposure to buybacks and munis.
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