Traditional asset location rules focused solely on asset-level tax efficiency can be misleading; incorporating an asset’s return potential and other characteristics can lead to more optimal portfolio decisions.
Direct lending’s combination of consistent, equity-like returns and bond-like tax inefficiency makes it particularly well-suited for tax-deferred accounts.
A holistic, tax-aware portfolio that combines thoughtful asset allocation and asset location can materially improve total returns while still mitigating undue tax headwinds.
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