Surprises for 2017 and Tax Planning

Global Chief Investment Officer
Follow Jeremy Schwartz

Last week on my podcast, I spoke with Mark Yusko, CEO of Morgan Creek Capital Management, and Bill Sweet, Certified Financial Planner™ and Investment Advisor Representative at Ritholtz Wealth Management.


Global Surprises


Mark and I spoke about his global outlook and the top 10 surprises for 2017 that he just released, including:


1) Mark’s surprise scenario in which the U.S. enters a recession, making the recent upward move in interest rates a head fake in a longer-term down cycle. 


2) A scenario where Japan turns things around, and why Mark is over-weight Japan and Japanese financials but has gotten there through currency-hedged approaches


3) Why he likes European banks and the euro


4) Skating to where the puck is going: why Mark’s asset allocation portfolio of equities is the reverse of the most common themes, with the biggest allocations toward emerging markets, Europe and Japan, and the lowest allocation to the United States


I have a lot of sympathy for Mark’s asset allocation model. Mark believes the U.S. is the most expensive market around the world, a characterization I would not dispute. And while I don’t think the U.S. markets are quite as expensive as Mark does, I absolutely would agree to over-weight foreign markets. It is interesting to think of turning allocations upside down the way Mark does. 


Tax Planning for 2017 and Beyond


Bill Sweet and I talked about his approach to tax planning for his Ritholtz Wealth clients. With changes to tax rates on the horizon, it is a good time for investors to think about how tax rates impact portfolio choices, particularly for funding tax-qualified or tax-deferred accounts


Most people tend to think about tax planning once a year when they sit down with their accountants to prepare and file their taxes, but Bill suggests including tax implications in portfolio construction all year round. This “tax location” analysis is an important topic, and Bill discussed asset classes like managed futures and high-yield corporate bonds as prime candidates for such tax-qualified accounts as 401(k)’s or IRAs due to their high income distributions.


We also talked about Roth IRAs and traditional IRAs and the rationales to start considering Roth IRAs, especially if Trump starts lowering individual income taxes and one expects tax rates to increase more in the future. 


Bill also discussed a scenario of converting tax- deferred assets into a qualified plan for those who like thinking creatively.



Listen to the entire “Behind the Markets” podcast series here.


Important Risks Related to this Article

Foreign investing involves special risks, such as risk of loss from currency fluctuation or political or economic uncertainty.  

Neither WisdomTree Investments, Inc., nor its affiliates, nor Foreside Fund Services, LLC., or its affiliates provide tax advice.  All references to tax matters or information provided on this site are for illustrative purposes only and should not be considered tax advice and cannot be used for the purpose of avoiding tax penalties.  Investors seeking tax advice should consult an independent tax advisor.

WisdomTree Funds are distributed by Foreside Fund Services, LLC, in the U.S. only.  Foreside Fund Services, LLC, is not affiliated with the other entities mentioned. 

For more investing insights, check out our Economic & Market Outlook


About the Contributor
Global Chief Investment Officer
Follow Jeremy Schwartz

Jeremy Schwartz has served as our Global Chief Investment Officer since November 2021 and leads WisdomTree’s investment strategy team in the construction of WisdomTree’s equity Indexes, quantitative active strategies and multi-asset Model Portfolios. Jeremy joined WisdomTree in May 2005 as a Senior Analyst, adding Deputy Director of Research to his responsibilities in February 2007. He served as Director of Research from October 2008 to October 2018 and as Global Head of Research from November 2018 to November 2021. Before joining WisdomTree, he was a head research assistant for Professor Jeremy Siegel and, in 2022, became his co-author on the sixth edition of the book Stocks for the Long Run. Jeremy is also co-author of the Financial Analysts Journal paper “What Happened to the Original Stocks in the S&P 500?” He received his B.S. in economics from The Wharton School of the University of Pennsylvania and hosts the Wharton Business Radio program Behind the Markets on SiriusXM 132. Jeremy is a member of the CFA Society of Philadelphia.