%0 Journal Article %A Stephen M. Horan %T Applying After-Tax Asset Allocation %D 2007 %R 10.3905/jwm.2007.690951 %J The Journal of Wealth Management %P 84-93 %V 10 %N 2 %X The notion of after-tax asset allocation is gaining acceptance among private wealth managers. This article presents practical methods of calculating an investor's after-tax asset allocation, particularly as it relates to taxable accounts. The after-tax value of a taxable account can be substantially less than its stated pretax value, especially for long time horizons. Interestingly, after-tax values of taxable accounts are relatively insensitive to the investment's systematic risk but inversely related to the investment's tax burden and the risk-free rate. These results highlight the importance of converting balances in taxable accounts to after-tax values—a practice which heretofore has been dismissed by scholars and practitioners.TOPICS: Wealth management, portfolio construction, risk management, performance measurement %U https://jwm.pm-research.com/content/iijwealthmgmt/10/2/84.full.pdf