Optimal investment under capital gains taxes

By Alexander Dimitrov, Christoph Kühn

Rating

1366
Battle Count: 115

Relevance

6/10
Highly relevant for tax-aware portfolio optimization in quantitative trading. The theoretical results on existence of optimal portfolios under LUL provide foundations for implementing tax-efficient trading strategies. The NUIBR condition and closedness results are important for ensuring well-posedness of optimization problems in practice. However, the paper is purely theoretical without computational algorithms, limiting direct implementation. The insights about tax-deferral advantages and the non-uniqueness of optimal strategies are practically relevant for tax-aware trading systems.

Implementation Complexity

9/10
Extremely high complexity. The paper involves advanced stochastic analysis, convex analysis in infinite-dimensional spaces, Komlos' lemma, reaction functions, decomposition of strategies, and intricate measure-theoretic arguments. The mathematical machinery (closedness in probability, essential infima, random sets, Castaing representations) is far beyond standard quantitative finance implementations. No computational algorithm is provided.

Reproducibility

3/5
The paper is purely theoretical with complete mathematical proofs. All results are self-contained with explicit constructions (e.g., Example 3.1, Example 4.12). However, there is no computational component or numerical implementation to reproduce. The mathematical arguments are fully detailed and verifiable.

About this paper

Methodology: Stochastic Optimization / Convex Analysis in Discrete Time Financial Markets. Problem types: Portfolio Optimization, Optimization, Risk Management.

The interactive Everscope explorer (charts, battles, favorites) loads below.