BERWYN, PA — Envestnet reported that accounts using its unified managed account Tax Overlay program generated an average 1.96% after-tax return benefit during 2025 compared with a scenario without the service, with nearly 99% of participating accounts showing a benefit in the company’s internal analysis.
The results cover accounts that used the Tax Overlay service throughout the full 2025 tax year. Envestnet uses the program to manage taxes across taxable portfolios through tax-lot-level trading, capital gains budgeting and deferral, and ongoing tax-loss harvesting.
Envestnet manages about $26 billion through its UMA Tax Overlay and Fund Strategist Tax Management programs as of March 31, 2026. Client use of the UMA Tax Overlay has grown at an approximately 29% compound annual rate over the past three years.
The average UMA Tax Overlay account holds about $2 million, with the service aimed primarily at higher-net-worth clients whose portfolios often include individual securities and concentrated equity positions.
Envestnet estimated that the average participating account incurred about $1,700 in annual service costs during 2025 while avoiding more than $25,000 in estimated tax liability relative to removing the service.
The company’s analysis also found that more than 99% of accounts remained within their short-term capital gains budgets during 2025, while more than 96% stayed within their customized long-term gains budgets.
Accounts with heavier allocations to actively managed strategies recorded the largest reported benefit. Those with more than 80% allocated to equity separately managed account or Fund Strategist Portfolio sleeves generated an average after-tax benefit of 2.34%, more than twice the benefit reported for accounts with lower allocations to actively managed strategies.
Envestnet’s approach differs from standalone tax-loss harvesting strategies by applying tax management across the entire taxable portfolio. The system can defer short-term gains until they qualify for long-term treatment and uses client-specific gains budgets to manage when and how gains are realized.
“Tax management is not about what you make. It’s about what you keep,” Erik Preus, Envestnet’s group head of investment management, stated. He described the service as a way for advisers to apply tax management across clients’ taxable portfolios rather than concentrating such work around year-end planning.
The UMA Tax Overlay is paired with Envestnet’s Fund Strategist Tax Management service for model portfolios as part of the company’s broader tax-management offering.
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