Written by Tom Bratkovich and William Lesik

Tax-efficient investing can be a crucial yet often overlooked investment strategy for maximizing long-term wealth accumulation. Traditional investment analysis and strategy focuses on pre-tax returns and typically ignores the negative impact taxes may have on overall returns and long-term wealth accumulation. Failing to consider after-tax performance can significantly erode investment gains over time. In an industry dominated by large investment managers catering to non-taxable institutions (pensions, endowments, foundations), many family offices and high net worth investors lack access to tax-sensitive solutions. This whitepaper introduces a framework for tax-efficient investing in private markets, emphasizing risk-adjusted after-tax returns, standardized tax impact metrics, and the concept of Tax Alpha. While public markets provide some opportunities for tax efficiency (e.g. tax loss harvesting, direct indexing), private market investments offer more opportunities to pursue tax efficiency. By integrating a tax-efficient portfolio strategy, tax-efficient investment structuring, and deliberate investment selection, investors may improve after-tax returns without taking on incremental risk, ultimately building a more effective approach to wealth preservation and accumulation.