What is tax drag?
Tax drag refers to the reduction of a portfolio’s 3 year annualized return due to income taxes triggered by distributions and capital gains in a non-qualified account.
Tax drag applies to mutual funds and ETFs only, and does not account for state or local taxes. Portfolio performance in Kwanti does not include tax drag.
How tax drag is calculated
Tax drag compares a fund's pre-tax return to its after-tax return. The calculation assumes the investor pays the maximum federal tax rate on capital gains and ordinary income, and assumes distributions are reinvested on the pay date. It does not consider taxes from selling or liquidating positions. The result is the percentage of assets lost to taxes.
Note: Tax drag analysis is not included in the PDF report.
Viewing tax drag
Tax drag shows how much of a portfolio's return is lost to taxes on distributions and capital gains in taxable accounts. Use it to compare the after-tax impact of holdings across a portfolio, model, group, or blend.
To view tax drag, open the Expenses tab in a portfolio and select the Tax drag subtab.
To analyze the tax drag of a portfolio, select the Expenses tab in the portfolio view and then select the Tax Drag subtab.
Taxable vs. non-taxable accounts:
Use the checkbox next to a portfolio or model to set whether it is treated as taxable.
For groups and blends, click the Taxable checkbox to open a pop-up where you designate which components are taxable and which are not. The checkbox shows partial when some components are marked non-taxable.
Note: When you change the taxable status of an account imported from an integration partner, the change is not saved between Kwanti sessions.
Details per position
You can toggle between a bar chart view and table view using the buttons above the chart/table.