Tax-Managed SMAs: Better Than ETFs?Tax-Managed SMAs: Better Than ETFs?
ETFs are popular among investors seeking market-like exposure—but are they the most beneficial? Find out why tax-managed SMAs might be better.
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Sponsored by Parametric
Rey Santodomingo, CFA, Managing Director, Investment Strategy (emeritus) | Andrew Subkoviak, CFA, Senior Investment Strategist
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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