August 19, 2024 

New partnership with Capital Group offers strategies optimized by the Custom Active solution

SEATTLE - Parametric Portfolio Associates (Parametric), part of Morgan Stanley Investment Management (MSIM), is pleased to announce the launch of Custom Active, an innovative tax optimization capability for asset managers. Investors can now access established equity strategies customized for tax efficiency and other considerations powered by the investment expertise of Parametric. In addition to supporting MSIM’s Eaton Vance and International Equity teams, Parametric is pleased to be partnering with Capital Group to offer several strategies optimized by the Custom Active solution. These strategies are available through Morgan Stanley Wealth Management (MSWM) and registered investment advisers (RIAs).

“We developed the Custom Active offering to help asset managers meet the demand from financial advisers and their clients for tax management and customization,” said Ben Huneke, Co-Head of MSIM.  “Parametric’s three decades of experience solving client challenges through innovative, systematic solutions backed by investment science makes us uniquely positioned to offer a mechanism for active equity managers to address the complex tax-management and investment goals of their clients.”

Through Custom Active, asset managers partner with Parametric to offer an existing equity strategy through an active separately managed account (SMA) optimized for tax management. The SMAs also offer additional customization opportunities including sector and industry screens, and client-directed gain/risk budgets.

Jared Gray, Managing Director at Parametric, added: “Effective tax management can add meaningful tax alpha annually to an investor’s after-tax return, a benefit that individuals with complex tax and investment needs may be missing out on today. Custom Active is a solution that enables equity managers to greatly enhance their well-established strategies with elevated tax management and other customization tools. As investors experience the advantages of active equity tax management, this will increasingly become the standard.”

In partnership with active managers, Parametric determines well-suited strategies and implements an actively managed model of primary securities and a list of additional securities while seeking to systematically offset any gains with losses through year-round tax optimization review. Parametric’s approach to systematic tax management is centered on transparent, rules-based analysis and opportunistic tax-loss harvesting.

The announcement follows additional applications of Parametric into MSWM, including most recently introducing patented fractional share holding capabilities into the entire suite of Parametric’s Custom Core equity indices in unified managed accounts. MSWM was also an early adopter of the Custom Active solution across eight portfolios driven by the tactical asset allocation advice of MSWM’s Global Investment Committee, and more recently with other MSIM and third-party strategies.

Jed Finn, Head of Morgan Stanley Wealth Management, added: “Effective tax management is crucially important to the wealth management clients we serve – particularly among the high net worth segment.  In welcoming Parametric into the MSWM franchise, we have been able to deliver another seamless and differentiated solution for clients and the Advisors who serve them. Parametric continues to raise the bar for the industry and we are excited to further unlock its unique power.”

While Parametric currently manages SMAs based on active strategies from Capital Group and MSIM’s Eaton Vance and International Equity teams, additional strategies from managers across investment styles including domestic, international, large, mid and small cap are expected to be added.

Parametric has a 30+ year history of partnering with advisors, institutions and consultants to build customized portfolio based on what is most important to them and their clients. The Custom Active capability allows Parametric to work more closely with asset managers to better deliver solutions to advisors and clients. Parametric is dedicated to understanding inefficient markets and focused on innovative ways to build portfolios, reduce inefficiencies and capitalize on market opportunities.

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About Parametric

Parametric partners with advisors, institutions, and consultants to build innovative portfolio solutions focused on achieving their long-term financial objectives. A leader in custom solutions for more than 30 years, Parametric helps investors efficiently access market exposure, solve implementation challenges, and design multi-asset portfolios that respond to evolving needs. Parametric also offers systematic alpha strategies to complement clients’ core holdings. Parametric is part of Morgan Stanley Investment Management, the asset management division of Morgan Stanley. Learn more at www.parametricportfolio.com.

About Morgan Stanley Investment Management

Morgan Stanley Investment Management, together with its investment advisory affiliates, has more than 1,400 investment professionals around the world and $1.5 trillion in assets under management or supervision as of June 30, 2024. Morgan Stanley Investment Management strives to provide outstanding long-term investment performance, service, and a comprehensive suite of investment management solutions to a diverse client base, which includes governments, institutions, corporations and individuals worldwide. For further information about Morgan Stanley Investment Management, please visit www.morganstanley.com/im.

Risk Considerations

Investment strategies that seek to enhance after-tax performance may be unable to fully realize strategic gains or harvest losses due to various factors. Market conditions may limit the ability to generate tax losses. Tax -loss harvesting involves the risks that the new investment could perform worse than the original investment and that transaction costs could offset the tax benefit. Also, a tax-managed strategy may cause a client portfolio to hold a security in order to achieve more favorable tax treatment or to sell a security in order to create tax losses.  Market values can change daily due to economic and other events (natural disasters, health crises, terrorism, conflicts, social unrest, etc.) that affect markets, countries, companies, or governments. It is difficult to predict the timing, duration, and potential adverse effects (portfolio liquidity , etc.) of events. Accordingly, you can lose money investing in an SMA.

This material is only intended for and will be only distributed to persons resident in jurisdictions where such distribution or availability would not be contrary to local laws or regulations. MSIM, the asset management division of Morgan Stanley (NYSE: MS), and its affiliates have arrangements in place to market each other’s products and services. Each MSIM affiliate is regulated as appropriate in the jurisdiction it operates. MSIM’s affiliates are: Eaton Vance Management (International) Limited, Eaton Vance Advisers International Ltd, Calvert Research and Management, Eaton Vance Management, Parametric Portfolio Associates LLC, and Atlanta Capital Management LLC.

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