Mid-Year Tax Planning: Necessary for Portfolio Management
Planning for tax efficiency in one's portfolio during periods of volatility is essential and a portfolio management 'best practice' that can save investors' money. By understanding one's overall portfolio tax situation, unrealized and realized gains can be managed.
Financial professionals consider the following when developing a tax strategy for their clients:
- The household's portfolio performance overview
- The tax consequences of trading and rebalancing
- Tax-efficient portfolio creation
- Taxable YTD reporting
- Realized and unrealized gains and losses.
- Dividends and distributions YTD
Having the insight to make decisions at a moment's notice to produce returns while accounting for taxes is critical during any market condition. Discussing tax-saving strategies with a financial professional is vital throughout the year, as values fluctuate and can impact one's tax situation.
Ideas to Help Offset Income & Lower Taxes
Examining and updating one's W-4 is a great start. However, there are a few more ways that may help offset one's personal tax liability.
- Increase contributions to a pre-tax retirement savings account. Aim to maximize contributions per IRS guidelines and take advantage of catch-up contributions.
- Fully fund an FSA or HSA.
- Donate money to a charitable cause.
- Consider gifting using a donor-advised fund (DAF).
- Tax efficiency in retirement
A financial professional's tax-efficiency tools may provide insight into asset distribution needs for those approaching retirement or already retired. They can help create a portfolio that is both tax-efficient and goal-oriented throughout retirement. Remember, the goal is to continue producing portfolio returns while minimizing taxes as retirement assets are spent down or repositioned to pass to heirs.
Let's Team Up
As we approach mid-year, it's time to meet with a financial professional to review your portfolio and plan for tax efficiency for the rest of the year.
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Since bottoming on March 30, U.S. equities have rallied 19% and continue to push to new all-time highs, fueled in large part by sustained enthusiasm around artificial intelligence. The first quarter earnings season highlighted extraordinary growth across the AI supply chain. As a result, AI-linked returns are no longer being driven solely by a small group of hyperscalers. This year, the opportunity set has broadened from the companies funding AI capex to the companies enabling it.
One way to see this shift is by comparing returns of AI chip “customers” versus “suppliers.” Hyperscalers remain the primary customers for advanced chips deployed in data center projects, while suppliers sit upstream, providing the inputs, equipment and infrastructure that make the buildout possible. Compute has dominated the conversation around data center expansion, but builders must also solve for cooling and overheating prevention, server connectivity, and electricity distribution. Year-to-date, suppliers have outperformed customers by roughly 230%, suggesting the market is increasingly expressing the AI theme through the broader ecosystem rather than only through hyperscalers. Semiconductors, hardware, power and metals and mining have all benefited as demand for these inputs accelerates. This supplier strength is also supporting emerging market equity performance, given the concentration of key suppliers in Asia.
The AI theme is likely to remain a key driver for markets, but 2026 has made one point clear: the investable opportunity set is no longer confined to a handful of hyperscalers. As AI capex translates into real infrastructure, leadership has broadened from the check writers to the companies supplying the inputs that make buildout possible, which is a great reminder for investors that the ways to invest in the AI story will continue evolving.
Chart of the Week: Source: Bloomberg, J.P. Morgan Asset Management. The company information above is being provided for informational and educational purposes only. It is not intended nor should it be relied upon as investment advice, guidance or a recommendation to purchase, hold or sell any security. Data as of 5/28/26.
Thought of the Week: Source: Bloomberg, J.P. Morgan Asset Management. Data as of 5/28/26.
Abbreviations: Cons. Sent.: University of Michigan Consumer Sentiment Index; CPI: Consumer Price Index; EIA: Energy Information Agency; FHFA HPI: - Federal Housing Finance Authority House Price Index; FOMC: Federal Open Market Committee; GDP: gross domestic product; HPI: Home Price Index; HMI: Housing Market Index; ISM Mfg. Index: Institute for Supply Management Manufacturing Index; PCE: Personal consumption expenditures; Philly Fed Survey: Philadelphia Fed Business Outlook Survey; PMI: Purchasing Managers' Manufacturing Index; PPI: Producer Price Index; SAAR: Seasonally Adjusted Annual Rate
Index: Institute for Supply Management Manufacturing Index; PCE: Personal consumption expenditures; Philly Fed Survey: Philadelphia Fed Business Outlook Survey; PMI: Purchasing Managers' Manufacturing Index; PPI: Producer Price Index; SAAR: Seasonally
Adjusted Annual Rate
MSCI EAFE is a Morgan Stanley Capital International Index that is designed to measure the performance of the developed stock markets of Europe, Australasia, and the Far East.
Bond Returns: All returns represent total return. Index: Bloomberg US Aggregate; provided by: Bloomberg Capital. Index: Bloomberg Investment Grade Credit; provided by: Bloomberg Capital. Index: Bloomberg Municipal Bond 10 Yr; provided by: Blomberg Capital. Index: Bloomberg Capital High Yield Index; provided by: Bloomberg Capital.
Key Interest Rates: 2 Year Treasury, FactSet; 10 Year Treasury, FactSet; 30 Year Treasury, FactSet; 10 Year German Bund, FactSet. 3 Month LIBOR, British Bankers’ Association; 3 Month EURIBOR, European Banking Federation; 6 Month CD, Federal Reserve; 30 Year Mortgage, Mortgage Bankers Association (MBA); Prime Rate: Federal Reserve.
Commodities: Gold, FactSet; Crude Oil (WTI), FactSet; Gasoline, FactSet; Natural Gas, FactSet; Silver, FactSet; Copper, FactSet; Corn, FactSet. Bloomberg Commodity Index (BBG Idx), Bloomberg Finance L.P.
information from FactSet's Pricing database as provided by MSCI. Russell 1000 Value Index,
Style Returns: Style box returns based on Russell Indexes with the exception of the Large-Cap Blend box, which reflects the S&P 500 Index. All values are cumulative total return for stated period including the reinvestment of dividends. The Index used from L to R,
top to bottomare: Russell 1000 Value Index (Measures the performance of those Russell 1000 companies with lower price-to book ratios and lower forecasted growth values), S&P 500 Index (Index represents the 500 Large Cap portion of the stockmarket, and
is comprised of 500 stocks as selected by the S&P Index Committee), Russell 1000 Growth Index (Measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values), Russell Mid Cap Value Index (Measures
the performance of those Russell Mid Cap companies with lower price-to-book ratios and lower forecasted growth values), Russell Mid Cap Index (The Russell Midcap Index includes the smallest 800 securities in the Russell 1000), Russell Mid Cap Growth Index (Measures the performance of those Russell Mid Cap companies with higher price-to-book ratios and higher forecasted growth values), Russell 2000 Value Index (Measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values), Russell 2000 Index (The Russell 2000 includes the smallest 2000 securities in the Russell 3000), Russell 2000 Growth Index (Measures the performance of those Russell
2000 companies with higher price-to-book ratios and higher forecasted growth values).
Past performance does not guarantee future results.
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Unless otherwise stated, all data is as of June 1, 2026 or as of most recently available.
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