Tax Efficient Investing 

Savvy advisors collaborate with their clients to optimize the tax efficiency of their portfolios. At Brookstone Capital Management, our tax aware allocation framework considers an approach we call asset location. Asset location is a process that identifies which investment is ideal for different types of accounts. 

At Brookstone Capital Management, we maintain a roster of investment vehicles that allow for the easy implementation of tax efficient investing. A brief description of a few strategies commonly employed in taxable accounts to maintain tax efficiency is below.

Exchange Traded Funds (ETFs): ETFs burst onto the scene 20 years ago as a new investment vehicle. They were built to combine the benefits of a mutual fund with all day trading like an individual stock. Today, ETFs have attracted in excess of $3 Trillion dollars in assets. A major reason is because ETFs are generally lower cost than mutual funds. However, an often overlooked attribute is that most ETFs do not generate capital gains distributions annually like mutual funds do. This makes ETFs a prime investment vehicle to consider when building a tax efficient portfolio.

Municipal Bonds: Municipal bonds are issued by different municipalities to either fund their operations or fund specific projects. Investors can access individual municipal bonds or utilize different ETF or mutual fund offerings that provide a diversified basket of municipal bonds.

Tax Efficient Model Portfolios: The Investment Committee at Brookstone builds risk-based model portfolios that allow investors to access professionally managed portfolios. The committee takes advantage of Brookstone’s open architecture investment platform to build models that are designed to be tax efficient.