TY - JOUR T1 - Of Passive and Active Equity Portfolios in the Presence of Taxes JF - The Journal of Wealth Management SP - 55 LP - 63 DO - 10.3905/jwm.1999.320359 VL - 2 IS - 2 AU - David M. Stein AU - Premkumar Narasimhan Y1 - 1999/07/31 UR - https://pm-research.com/content/2/2/55.abstract N2 - The authors focus on the impact of taxes on equity management styles, more specifically on the degree of portfolio management activity. They introduce the concept of active management, an endeavor which seeks to maximize after-tax returns from the management of taxes rather than from traditional security selection. The argue that active tax management adds substantial value, regardless of whether it works in conjunction with active or passive security selection strategies. They estimate the value of loss-harvesting using controlled simulations and discuss some of the practical aspects of tax management, such as risk control and portfolio transition. Finally they broaden the discussion to address the combination of active security selection and tax management and conclude that it appears that the combination of passive stock selection and active tax management is somewhat hard to beat. ER -