Eddie Bernhardt, Head of SMAs for Invesco, joined Keith Black, Managing Director of RIA Channel, to discuss the firm’s enhanced indexing approach and the growing role of tax-aware long-short strategies.
Bernhardt explains that Invesco developed its enhanced indexing strategies to address two common challenges facing high-net-worth investors: ossified direct indexing portfolios with significant unrealized capital gains and concentrated low-basis stock positions. By relaxing long-only constraints and adding short positions, the strategy seeks to generate both pre-tax alpha and tax alpha while helping investors realize losses and improve diversification.
Bernhardt notes that the short positions play an important role in generating realized losses during rising markets, complementing the losses generated by long positions during market downturns. As interest in tax-aware long-short strategies continues to grow, he highlights Invesco’s research-driven investment process, institutional expertise, and client-centric approach as key differentiators. Bernhardt believes the strategy is best suited for high-net-worth investors with ossified direct indexing portfolios or concentrated low-basis stock positions, while noting it is generally less appropriate for smaller accounts, under $250,000, or tax-sheltered portfolios.
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