The latest episode of The Albatross is about covered call writing and how it's not really a hedge and that might be fine.
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Regime resilience is creeping into investment diligence.
As tax increasingly enters investment committee discussions, leading allocators, advisers, and asset managers are planning for the current tax environment and the next.
Tax diligence has always been a thing - sometimes formalized with legal opinions or comfort letters - but the reality is that most advisers/allocators don't hire counsel to scrutinize investments before allocating. Instead, they informally rely on the asset managers selling the products.
In a healthy development, and part of the tax-aware vibe-shift I've been writing about for the past several weeks, leading asset managers are baking regime resilience right into their products. Regime resilience looks like this...
- The pitch leads with investing fundamentals
- The implementation nods to tax-efficiency
- The economic substance is obvious
- The investment is prepared for policy change
The goal is to address allocators' tax risk concerns proactively, and to get ahead of policy changes.
Many are asking me for a "state of the tax-aware union" and I've woven regime resilience into my quarterly report below.