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A Deep Dive Into Tax Withholding’s Effects on Benchmark Returns

Senior Portfolio Manager
Portfolio Manager

We believe that relative return, or the return difference between the fund and the index over a specified period, is the most suitable calculation to evaluate fund performance and attribution for passive strategies. However, investors must determine which index return is most instructive in assessing how a manager measures up to its peers and behaves in relation to its benchmark.

In this piece, we explain how net return can provide a more comprehensive view of performance for tax-sensitive investors, and we give an example of the impact of tax withholding on returns.

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