The (taxable wealth) times they are a-changin'

8 product trends re-shaping taxable wealth

Brent Sullivan

Aug 31, 2025

The August issue of Tax Alpha Trends unpacks previous issues.

The eight product trends above capture 95% of taxable wealth strategy conversations I have with advisers1.

I think the times are a-changin’.

The leading technologies powering the change are:

Tax-aware long/short
No-Distribution ETFs (which I’m calling NoDEs until I think of something better)

If tax-aware long/short strategies infuse the taxable portfolio with alpha and capital losses, this should mitigate the tax friction typically incurred through rebalancing and reallocation.

NoDEs bring more asset classes (and tax efficiency) into the taxable portfolio. Over the next several years, we can expect many more asset classes typically sitting in tax-advantaged accounts to migrate into taxable portfolios.

Section 351 conversion (🔌 I wrote a 70-page meme book about it, buy one of 10 copies left) allows advisers to efficiently reallocate by seeding ETFs in-kind at launch. It’s a nice way to transition from A to B without immediate tax. The pipeline of ETFs is sparse, though.

The tax-aware trader funds are technically fascinating, and I’ll have more to say about them in the coming weeks, but know the following:

They often distribute business losses, which can offset ordinary income, including wages (up to a limit)
The limit is called the Excess Business Loss (EBL) limitation (see Form 461 for the current safe harbor amounts), and advisers have planning opportunities around it
AQR’s paper Limitation on Trader Fund Losses under the CARES Act of 2020 is required reading for advisers considering the trader funds for their clients
Trader funds are usually only available to qualified purchasers

Hedged equity keeps coming up.

This category is hopelessly broad, including tail risk, covered calls, collars, buffers, barriers, bangels, boppers, and bumpers. Some of those may be fictional. The point is that there are now hundreds of ETFs, and countless bespoke SMA solutions addressing investors’ fear instinct with decidedly mixed pre- and post-tax results.

I’m on vacation now 🍹🍹🍹, but I’ll have more to say about this and the other product trends in the coming months.