%0 Journal Article %A Jean L.P. Brunel %T A Tax-Efficient Portfolio Construction Model %D 2001 %R 10.3905/jwm.2001.320411 %J The Journal of Wealth Management %P 43-49 %V 4 %N 2 %X Constructing a multi-investment strategy class portfolio for a taxable investor cannot simply rely on the traditional sequential optimization process, because the costs associated with the regular rebalancing of the portfolio across individual building blocks are higher than the potential loss of value added arising from entrusting the management of the portfolio to a generalist rather than to a number of specialists. It also reflects the fact that each specialist will tend to operate in a relative vacuum, preventing them from taking maximum advantage of the opportunities to raise the overall portfolio's tax efficiency. Considering the interaction between portfolio activity, pretax value added, and tax efficiency, the author proposes an alternative design, dubbed “core and satellites.” In that design, the portfolio is “barbelled” between highly tax-efficient, low-value-added strategies and high-value-added tax-inefficient approaches. %U https://jwm.pm-research.com/content/iijwealthmgmt/4/2/43.full.pdf