Investment firm proposes trading strategy to help cut back on annual fund distributions
Russell Investments Canada Limited is planning to add tax management to the investment objectives of four of its funds.
The investment manager is proposing the new objective to securityholders of its Focused US Equity Pool, Focused US Equity Class, Focused Global Equity Pool, and Focused Global Equity Class.
Tax management is a trading strategy to minimize the amount of dividends it pays each year, leading to tax-managed appreciation.
Tax management involves one or some combination of tax-loss harvesting; reducing offsetting trades, where the fund reallocates a security from one of its sub-advisors to another, in order to avoid potential tax costs that could arise from selling the security; reducing portfolio turnover; and seeking tax-efficient equities.
Read more: Could tax-loss harvesting be a tailwind for ESG ETFs?
As one of the funds' sub-advisers, Russell Investments Implementation Services will carry out tax management.
“With more than 30 years of tax-managed investing experience in the U.S. and a decade in Australia, we’ve honed solutions that are well-designed to maximize investors’ after-tax returns,” said Brad Jung, president, Russell Investments Canada Limited and head of North America Advisor & Intermediary Solutions at Russell Investments.
“We’re eager to share our tax-managed capabilities with Canadian investors to help them improve after-tax wealth and keep more of what they earn.”
Read more: Mackenzie offers tax-managed access to the world with new fund
Meetings will be held on or around November 28 for securityholders of each fund to approve the change. If approved, the change to each fund's investment objective will take effect on January 3, 2023, with corresponding adjustments to each investment strategy.
The fund’s names will also be changed to Russell Investments Tax-Managed US Equity Pool, Russell Investments Tax-Managed US Equity Class, Russell Investments Tax-Managed Global Equity Pool, and Russell Investments Tax-Managed Global Equity Class to reflect the new tax-optimized aspect of each.
