Tax-Aware Long/Short

The goal of our tax-aware long/short strategies is to offer suitable taxable U.S. investors direct access to our quantitative strategies in a tax-efficient manner. The strategies have the potential to add additional alpha to portfolios and improve diversification characteristics.

Yes. The portfolio can appreciate in value while simultaneously generating realized losses on specific positions. Losses are a tax construct tied to individual transactions, not a reflection of overall portfolio performance.

Losses are generated as a byproduct of the investment process and are not tied to any specific event. They may be applied against capital gains from any source, including real estate transactions, business sales, carried interest, and more.

Yes, however a portfolio that defers taxes compounds on a larger base each year. Over long time horizons, that compounding advantage may generate significantly more after-tax wealth than a tax-inefficient portfolio, even after paying all deferred taxes at liquidation.

No. The strategy works with cash or any existing portfolio.

Traditional tax-loss harvesting captures losses only when holdings decline, so as a long-only portfolio appreciates, harvestable losses generally become scarce. A long/short portfolio holds positions on both sides of the market, and at any given time some longs and some shorts trade below cost. The strategy may realize those losses as its models rotate out of positions they no longer favor, and the replacements are chosen for expected return rather than to mimic what was sold. Short positions lose value when markets rise, which is why a long/short book may continue to harvest losses in rising markets after a long-only program has run out. Our expected return models select the positions, not tax reasons alone, so the same book also seeks pre-tax alpha and diversification.

Yes, these strategies go by many names, including tax-managed long/short, tax-efficient long/short, and long/short tax loss harvesting, but are typically all long/short implementations of quantitative equity strategies. A long/short extension strategy adds long and short positions on top of varying levels of market exposure. Ours ranges from 130/30 up to 300/200 depending on the client's risk tolerance and objectives. We offer our tax-aware long/short through separately managed accounts rather than a pooled fund, so the client's funds remain completely segregated with a standard 1099 for tax reporting.

A long/short SMA is a separately managed account that runs a long/short strategy in the client's own name. The client directly owns the positions rather than units of a pooled fund. Realized tax losses in the account belong to the client and arrive on a standard 1099.

Yes. Accounts generally begin at a $1M minimum. Please contact us directly to discuss whether the strategy is appropriate for your situation.

NinePointTwo does not publish performance for Prism, its tax-aware long/short strategy, on its website or in other public materials, consistent with its compliance policies. Prospective clients and their advisors can request that performance information directly. NinePointTwo has managed quantitative strategies since 2018 and tax-aware long/short strategies since 2025. Prism draws on the same in-house models. Tax-aware long/short managers generally do not publish live results for these separately managed accounts on their public websites.

NinePointTwo sizes each account's leverage to its collateral and monitors margin daily. Adding cash or other holdings to the account increases the buffer.

There is no lockup. The client can lower the account's leverage or close it at any time. Unwinding the positions realizes whatever gains or losses are embedded in them. The preferred route is for NinePointTwo to move the account to long-only direct indexing, a transition that may be managed without a tax impact.

The account reports on a standard 1099. A long/short account generates many more transactions than a long-only portfolio, so the 1099 runs longer. Most tax software and tax preparers import 1099 data directly, so a longer form is not necessarily more work.