RT Journal Article SR Electronic T1 Is Smart Beta Still Smart after Taxes? JF The Journal of Portfolio Management FD Institutional Investor Journals SP 123 OP 134 DO 10.3905/jpm.2014.40.4.123 VO 40 IS 4 A1 Hemambara Vadlamudi A1 Paul Bouchey YR 2014 UL https://pm-research.com/content/40/4/123.abstract AB In this article, the authors focus on the after-tax performance of several smart-beta strategies. These strategies have higher turnover than the capitalization-weighted index, which leads to a greater tax on returns. Despite this drag, most strategies retain a long-term excess return. The authors also test the effectiveness of tax-managed versions of the strategies. They observe that, relative to most active managers, smart-beta strategies have lower turnover, greater breadth, and are less concerned with stock selection. By allowing a tracking-error risk budget versus the original strategy, tax management can reduce much of the tax impact.TOPICS: Manager selection, passive strategies, statistical methods