Animal Spirits Podcast Talk Your Book: After-Tax Alpha
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Mar 16, 2026 Erkko Etula, CEO and CIO of Brooklyn Investment Group, builds tech-powered, tax-aware long/short SMA strategies. He discusses the firm’s post-acquisition scaling, the origin and mechanics of tax-advantaged long/short overlays, advisor use cases like concentrated positions, and how leverage, risk systems, and de-leveraging affect tax loss harvesting.
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Long Short Overlay Multiplies Tax Loss Harvesting
- Tax-advantaged direct indexing plus a long-short overlay magnifies realized-loss harvesting beyond long-only strategies.
- Ben and Michael explain advisors can use leverage (e.g., 130/30) to dramatically increase first-year realized losses versus ~10% for long-only.
Use Long Short Only For Clear Client Needs
- Use long-short SMAs for specific advisor use cases like liquidity events, concentrated stock diversification, or portfolio migrations.
- Work with advisors to assess risks and ensure the strategy matches the client's urgent tax or diversification needs.
Technology Is The Hard Part Of Scaling SMAs
- The hardest part of scaling tax-managed long-short SMAs is daily risk and tax management across thousands of bespoke accounts.
- Brooklyn focused on building robust technology to monitor risk, trades, and tax events at scale.