Sponsored by Parametric 
ETFs are popular vehicles for investors seeking passive, index-based market exposures. Yet there are structural issues that make them less than ideal for many high-net-worth investors. A tax-managed separately managed account (SMA) may deliver the same diversified, index-like exposure while offering increased after-tax returns for these investors. Additionally, tax-managed SMAs allow greater control over the underlying securities. This gives investors more governance over their portfolio’s tax efficiency and enables customizations that reflect their investment objectives and responsible investing principles. This paper offers a description of how ETFs and tax-managed SMAs work, and it demonstrates the advantages of using tax-managed SMAs for tax efficiency and customization.
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