When I published my first tax-aware long/short market map, there were only a handful of tax-aware long/short asset managers involved.
What is tax-aware long/short? My 2024 article is a decent place to start.
Now I count more than a dozen and possibly two, if you add limited partnerships and direct-to-consumer offerings.
They are all very different.
The alpha model, financing terms, operational robustness, etc. vary significantly, unlike in direct indexing, where the differences exist (loss harvesting cadence, customization levers, etc.) but I think play a smaller role in the end-investor's experience.
There's always some confusion about what I mean by "tax-aware long/short" and the requirements, in my mind, are that the investment vehicle:
- have full passthrough treatment, and
- some customization flexibility
This includes things like managed accounts and limited partnerships, but does not include mutual funds and ETFs.
So, for instance, someone seeking to de-risk a concentrated public stock position in a tax-neutral way wouldn't get much help from a mutual fund or ETF, while a managed account or LP could accept the asset directly and work it down over time.
My latest market map (below) is the product of two years of iteration (I try to ship a new map quarterly), and I've made a few improvements...