How IT Works

We restructure, rather than replace.

Most portfolios are constructed around the client's existing assets, including cash allocations. Holdings are analyzed for current risk exposures and the tax implications of any adjustment — then restructured for greater diversification and tax efficiency, targeting higher risk-adjusted returns.

STEP 01

Assign Target Asset Class

From a simple single-asset-class target to a custom blend of multiple indices, DGS offers flexible benchmark creation.

STEP 02

Design around constraints

The strategy is customized at the account level, allowing for multiple layers of client-specific preferences and requirements.

STEP 03

Incorporate systematic tilts

DGS’s systematic approach to managing equity portfolios is applied as an overlay to the target benchmark and constraints.

THE CHALLENGE

Why Portfolio Transitions Need a Smarter Approach

Portfolio transitions are often complicated by embedded gains, legacy holdings, client preferences, and account-level constraints, making the shift from the current to the target portfolio challenging.

The current portfolio is hard to comprehend

Legacy stock, ETF, and mutual fund positions from prior allocations complicate the initial analysis.

The target strategy is not clear

The target strategy is determined by the legacy assets that must be retained, rather than by a model allocation.

Taxes shape what can happen next

Even with a clear long-term direction, embedded gains may result in tax inefficiencies during the transition.

The path matters as much as the destination

A more effective transition typically involves implementing changes sequentially rather than through a lump-sum liquidation.

THE FIT

When Portfolio Transition Situations Make Sense to Address

If the current portfolio structure does not align with the intended strategy and changes are hindered by taxes, legacy holdings, or implementation constraints, additional review and planning are necessary.

The portfolio no longer fits

The portfolio was built with outdated investment structures that are now inefficient.
The portfolio contains legacy holdings acquired on an ad-hoc basis over several years.
The current allocation does not reflect the desired future management of the portfolio.

Gains make change harder

The unrealized gains make up a substantial portion of the portfolio’s value.
A one-step transition would create significant tax leakage.
The transition needs to be implemented in stages to minimize tax impact.

When the path is unclear

Defining the target portfolio is straightforward, but implementing it is more complex.
The portfolio includes different types of investment holdings.
The first step requires a thorough initial analysis.

The toolkit

Strategies DGS uses to implement Portfolio Transitions

DGS approaches large capital gain situations by analyzing the existing investment portfolio, the target long-term investment mandate, and the tax minimization goal.

Tax-Managed Long-Only

A more deliberate long-only approach with closer attention to gains, losses, and turnover

What it is

A custom long-only SMA that integrates DGS's systematic investing approach with lot-level tax management. The portfolio is tailored to the advisor's investment preferences and the client's existing holdings, gains, and constraints.

Why it matters

By building the portfolio around the client's current holdings instead of a preset model, DGS can implement tax-loss harvesting and incremental rebalancing at the individual stock level to improve structure while minimizing tax impact.

When it matters most

This solution is ideal for tax-sensitive clients, who have legacy portfolios that need improved portfolio structure over time.

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Long-Short Strategy

Amplified loss harvesting to offset the liability while retaining full market exposure

What it is

A systematic long-short strategy that combines long and short positions, using notional exposure beyond a traditional long-only portfolio to generate greater realized losses. Equity market exposure can be adjusted from full participation to market-neutral.

Why it matters

By harvesting losses on both the short and long sides, this strategy does not rely on market declines to generate tax losses. The long and short ratios can be adjusted to provide targeted equity market exposure.

When it matters most

When legacy assets have significant unrealized gains or when equity exposure needs to be reduced without selling existing holdings.

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Featured strategy

The advantage

Why our approach works best.

Tax efficient investing works because it helps reduce unnecessary tax drag, which means more of the client's money stays invested instead of being lost to taxes.

Thoughtful

Sequenced implementation

Not every portfolio should be reset in one move.

Strategy brief

Tax-aware

Efficient handling of embedded gains

Tax cost becomes part of the transition plan, not an afterthought.

Strategy brief

Strategic

Clearer path from current to target

The restructuring is based on a balance between risk, tax, and timing.

Strategy brief

Structured

Seamless Implementation

The focus stays on how to move from what is owned today to what should be owned next.

Strategy brief

Get an advisory call directly from our CIO.

Bring a real client situation you’re working on - concentrated stock, a legacy portfolio, a complex tax picture, or a cash implementation. We'll workshop it on a 30-minute call and follow up with a detailed implementation plan.

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A more thoughtful approach to portfolio transitions

We restructure, rather than replace.

Assign Target Asset Class

Design around constraints

Incorporate systematic tilts

Why Portfolio Transitions Need a Smarter Approach

The current portfolio is hard to comprehend

The target strategy is not clear

Taxes shape what can happen next

The path matters as much as the destination

When Portfolio Transition Situations Make Sense to Address

The portfolio no longer fits

Gains make change harder

When the path is unclear

Strategies DGS uses to implement Portfolio Transitions

Tax-Managed Long-Only

Long-Short Strategy

Why our approach works best.

Sequenced implementation

Efficient handling of embedded gains

Clearer path from current to target

Seamless Implementation

Get an advisory call directly from our CIO.