Customized Investing To Align With Values and Seek To Maximize Tax Advantages

Mariner Personalized Equity Portfolios (MPEP) are a way for clients to get exposure to capital markets. These portfolios are designed to align with how clients think about money and legacy holdings, as well as to complement their values.

What exactly is meant by personalization and what are some real-world uses of this strategy? This overview highlights the top uses of MPEP to show how this strategy seeks to enhance client portfolios.

Core Equity Holding

MPEP is a diversified core equity strategy for portfolios. The objective is to create a low-cost, low tracking error basket of stocks similar to an index ETF but with the benefit of personalization and has the tax advantages of owning each stock. Automated tax loss harvesting seeks to increase the strategy’s after-tax return.

Socially Conscious Overlays

Investor interest in socially conscious investing (SCI) has been surging in recent years. Whether clients are interested in environmental, social, and governance (ESG) issues, or religion-focused investment themes, many clients want their investment portfolios to be consistent with their values.

Despite growing interest for SCI investments, it can sometimes be difficult to find an appropriate fit because almost every client’s socially conscious values are different. Instead of only offering a few SCI strategies that we hope align with your wishes, we seek to create a strategy that we believe will work for your needs.

Using MPEP, we can help design a strategy by first choosing the exposure type: such as an index like the S&P 500, the Russell 2000 or one of several Mariner advisors actively managed equity strategies. The client then further personalizes the strategies by choosing which SCI factors are important to them. Clients can choose to buy only stocks with high ESG scores. They can exclude sectors, industry groups, or securities. They can invest along broad religious themes. And, they can exclude companies that participate in certain activities, such as adult entertainment, child labor, gambling or nuclear power, to create a strategy that is customized for their beliefs.

Tax Loss Harvesting

For taxable investors, MPEP can be a strategic way to add tax efficiency to a client’s portfolio. MPEP actively looks for security swaps in the strategy that allow the strategy to continue to meet your client’s objective while harvesting losses. The systematic harvesting of losses seeks to increase the after-tax return for MPEP and the client’s entire portfolio. The losses harvested can reduce the client’s tax bill by offsetting gains elsewhere in the portfolio or by reducing other sources of income.

Concentrated Positions and Staged Diversification

Owning concentrated positions and highly appreciated stocks is a good problem to have, but it’s a problem, nonetheless. In many cases, the very asset responsible for creating significant wealth may eventually become the biggest risk to financial peace of mind. The solution to the concentration problem is usually to sell and diversify, but that can come with a significant tax burden. With MPEP, our goal is to build a diversifying strategy around a concentrated position that seeks to reduce risk by investing the rest of the portfolio in stocks that complement the concentrated position and possess characteristics that offset some of the risks in the concentration.

By setting precise capital gains realization budgets and using active tax loss harvesting, MPEP seeks to assist clients in reducing those concentrated positions over time in a tax-efficient manner that helps diversify the client’s portfolio and continue to delay a potentially significant tax bill.

The value of investments held by any strategy may increase or decrease in response to economic, and financial events (whether real, expected or perceived) in the U.S. and global markets. The value of equity securities is sensitive to stock market volatility. Investments in foreign instruments or currencies can involve greater risk and volatility than U.S. investments because of adverse market, economic, political, regulatory, geopolitical, currency exchange rates or other conditions. In emerging countries, these risks may be more significant.

We rely on revenue based screens created by MSCI when excluding companies to accommodate Environmental, Social, and Governance (ESG) and Socially Conscious Investing (SCI) preferences. Depending on the investment strategy utilized or client-specific restrictions, a client’s portfolio may undergo exclusion or inclusion screening criteria. Screening criteria for non-financial reasons to exclude or include securities and therefore the client’s portfolio or strategy may forgo some market opportunities available to portfolios that don’t use such screening. Investments selected following these criteria may shift into and out of favor with investors depending on the market and economic conditions, and the client’s or strategy’s performance may at times be better or worse than the performance of accounts or strategies that do not use such criteria.

The S&P 500 Index is a market-value weighted index provided by Standard & Poor’s and is comprised of 500 companies chosen for market size and industry group representation. The Russell 2000 index is an index measuring the performance of approximately 2,000 smallest-cap American companies in the Russell 3000 Index, which is made up of 3,000 of the largest U.S. stocks. It is a market-cap weighted index. Individuals cannot invest directly in an index. Index returns do not include fees or expenses.

This material is provided for informational and educational purposes only. It does not consider any individual or personal financial, legal, or tax circumstances. As such, the information contained herein is not intended and should not be construed as individualized advice or recommendation of any kind. Where specific advice is necessary or appropriate, individuals should contact their professional tax, legal, and investment advisors or other professionals regarding their circumstances and needs.

Any opinions expressed herein are subject to change without notice. The information provided herein is believed to be reliable, but we do not guarantee accuracy, timeliness, or completeness. It is provided “as is” without any express or implied warranties.

There is no assurance that any investment, plan, or strategy will be successful. Investing involves risk, including the possible loss of principal. Nothing herein should be interpreted as an indication of future performance.

Mariner is the marketing name for the financial services businesses of Mariner Wealth Advisors, LLC and its subsidiaries. Investment advisory services are provided through the brands Mariner Wealth, Mariner Independent, Mariner Institutional, Mariner Ultra, and Mariner Workplace, each of which is a business name of the registered investment advisory entities of Mariner. For additional information about each of the registered investment advisory entities of Mariner, including fees and services, please contact Mariner or refer to each entity’s Form ADV Part 2A, which is available on the Investment Adviser Public Disclosure website. Registration of an investment adviser does not imply a certain level of skill or training.