Survey: Tax policies will sway investor strategy

Investors are more likely to change their investments strategies if government raises the capital gains tax, according to a survey released today by Eaton Vance Corp. of Boston. The survey, conducted by Washington-based Penn Schoen & Berland Associates Inc. involved 1,200 participants in July and August. A full 62% said they would alter their investments if Congress allowed the maximum tax rate on capital gains to revert back to 35%. Neither presidential campaign is promoting that proposal, but Sen. John McCain’s plan would extend the 15% rate on capital gains indefinitely. Sen. Barack Obama would leave the 15% rate in place for those making less than $250,000 a year but raise it to 20% for those who make more. It’s likely that no matter who wins, taxes will increase, said Duncan Richardson, chief equity investment officer at Eaton Vance. “The question is how fast and on whom,” he said. The study also found that interest in tax-managed strategies is rising. A full 56% said they would consider tax-managed investing if it provided a reasonable expectation of realizing 2% more of a return per year after taxes. But 66% have not invested in tax-managed funds or other funds designed to minimize the effects of taxes. The survey also found that investors with advisers are twice as likely as those without advisers to invest in tax-managed funds. In addition, a full 25% of investors with advisers owned tax-exempt municipal bonds, compared with only 10% of those who did not use an adviser. Eaton Vance had $144 billion in assets under management as of Sept. 30.