TAX AWARE HEDGE FUNDs long/SHORT invesTMENT strategy
An investment in a tax-aware (TA) hedge fund long/short strategy is a long-term illiquid investment that is made with after-tax cash. The goal of the tax aware hedge fund partnership is to provide after-tax returns for partners in the fund while potentially lowering ordinary income taxes via ordinary losses through the LLC Schedule K-1 Partnership or offsetting capital gains through tax-loss harvesting.
Glover Park Wealth Management, LLC is a SEC registered investment adviser (RIA) with access to Tax-Aware Hedge Fund Strategies. These long-short tax aware hedge fund strategies can typically only be purchased through a registered investment adviser (RIA) such as Glover Park Wealth.
Charles Schwab & Co., Inc. is the third-party custodian of client assets for Glover Park Wealth Management, LLC.
Tax-Aware Hedge Fund Strategies:
Long-Short Equity Strategy: A systematic, quantitative strategy or investment manager run study that invests long in undervalued stocks and short stocks which are expected to underperform.
Trend-Following Long-Short Managed Futures: access alternative exposures like systematic trend-following across equities, bonds, commodities, interest rates, currencies, global markets, and other asset classes.
Tax-Loss Harvesting: Hedge Funds that invest in long/short overlay extensions using portfolio margin. Tax-loss harvesting the short-term losses in the underperforming assets which are realized losses. Holding on to the winning positions over a year to create an unrealized long-term capital gain.
The goal of tax-aware funds is to grow after-tax capital while potentially generating ordinary losses along with short-term capital losses, while retaining positions with long-term capital gains. Some hedge fund structures use Notional Principal Contracts (NPC) that may lower ordinary income taxes, such as W-2 wages, K-1 business profits, or short-term investment gains.
Pass-Through Structure: As a partnership, tax items (gains, losses, etc.) "pass-through" directly to investors via Schedule K-1 forms.
Eligibility and Risks: High minimums, high fees, and they are typically illiquid with lockup periods. Investment returns are not guaranteed with the potential to lose value. Past performance is not indicative of future results.
Tax-Aware Investing Strategy: The long-term goal of investing in a tax-aware long/short hedge fund strategy is to compound after-tax wealth in a tax-aware manner.
Many private Tax Aware Hedge Funds require a Qualified Purchaser (QP) Requirement: A “qualified purchaser” is an individual or a family-owned business that owns $5 million or more in investments. The term “investments” does not include a primary residence or any property used for business.
Educational purposes only and not investment advice. Please consult with your CPA or Tax Advisor on tax-aware long/short hedge funds. Glover Park Wealth Management, LLC does NOT provide tax or legal advice.
If you are a Qualified Purchaser (QP) with an investment portfolio, liquid assets, or outside investments that are over $5,000,000, and would like to learn more about tax-aware hedge fund strategies, schedule a meeting with Glover Park Wealth Management, LLC today.
Tax Aware (TA) Long/Short Hedge Fund
Why use Glover Park Wealth as your RIA for the
Tax-Aware Hedge Fund Strategy?
Investment strategies such as Tax-Aware Long/Short Hedge Fund Investments are for ultra-high net worth individuals who have investable assets over $5,000,000 or $5mm. Qualified Purchasers (QP) only.
Which type of investor is a Tax Aware Hedge Fund (TA) well suited for?
C-suite executives with $1mm–$20mm plus in annual compensation. Private-equity or hedge-fund partners, high-income business owners or entrepreneurs, real-estate developers, professional athletes, medical practice owners, high-earning doctors, lawyers, consultants, engineers, dentists, or any individual in the highest marginal income tax bracket of 37% federal income tax bracket plus state income tax, with very high expected ordinary income yearly.
- Long-Short Equity: Strategies that invest in both long and short in related instruments. Plus, compared to their long-only counterparts, long-short strategies are designed to have lower sensitivity (beta) to equity market movements, as measured by beta, volatility and drawdowns. Using long/short strategies in a diversified portfolio, have the potential to potentially generate profits using leverage from their long and short positions depending on market movements, not guaranteed, and provide an element of portfolio protection in the form of a hedge. If the stock market markets decline, the short positions will gain in value, which help to potentially offset the losses in the long side of the portfolio.
- Trend Following: Managed futures strategies are systematic, alternative investment approaches to trade futures and derivatives contracts across global commodities, currencies, interest rates, swaps, stocks, and bonds, primarily using trend-following to profit from upward or downward price momentum. The goal is for diversification and returns uncorrelated to traditional equity markets, which provide uncorrelated returns to a diversified portfolio. Trend following strategies involve long/short positions in a variety of instruments and use technical analysis such as moving averages, and varying time horizons, which try to generate a return in any market condition, unlike traditional long portfolio of equities and bonds.
- Tax-Loss Harvesting: Going long/short extensions using portfolio margin, holding on to the winners and harvesting the short-term losses in the underperforming assets.
Contact us to learn more about Tax Aware (TA)Long/Short Hedge Funds
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At Glover Park Wealth Management, we believe that after tax efficient investing is a game changer for optimizing tax strategy for the ultra-high-net worth individuals.
As a plus, (TA) Hedge Funds using notional principal contracts NPC can be potentially well suited for ultra-high-net worth individuals in the highest income tax brackets as losses in the hedge fund partnership are considered active ordinary income losses, minimizing your overall tax burden.
Alternatively, the long-short and trend following strategies enable the fund manager or applied quantitative investment strategy to capitalize on both rising and falling markets, hedging against downturns while seeking growth of capital.
The financial advisors at Glover Park Wealth are ready to help you navigate these advanced tax aware long-short hedge fund strategies, plus help you keep more of your after-tax capital for long-term investments.