A strange issue is showing up among top American investors. Their money is growing faster than they expected.
After years of strong stock gains, many wealthy people are sitting on shares worth a lot more than what they paid. This is common for company founders, senior leaders, and early staff at tech firms. If they sell, they may face big capital gains taxes. If they do not sell, they can lose some options for what to do next.
So a new demand has risen for investment plans that pay close attention to taxes. One name at the middle of this is Hoon Kim. He used to work in quantitative investing. He started Quantinno Capital Management and took part in building a tax-focused approach that has become popular on Wall Street.
How Hoon Kim Built Quantinno
Kim does not fit the usual Wall Street billionaire mould. At 57, he holds an accounting PhD and has mostly avoided public attention, even as his firm has expanded fast.
Before he started Quantinno in 2018, Kim worked for AQR Capital Management for over ten years. There, he focused on number based investment methods. He also helped shape an early fund that aimed to account for taxes in a more careful way. After that, he noticed a path to offer similar tools to rich clients using separately managed accounts, often called SMAs.
What he built caught on.
About five years back, Quantinno had under $300 million in assets. By March 2026, the company said it had grown to $48.4 billion. That total covered around 10,600 accounts. After that, the figure jumped again within months, and it was later cited at roughly $70 billion. Kim’s share in the firm is now estimated to top $1 billion.
The pace suggests that tax focused planning, once seen as a narrow Wall Street specialty, has moved into everyday wealth management.
The Strategy Behind the Tax Savings
Tax-loss harvesting is usually simple. An investor sells a holding that is down, books the loss, and then uses that loss to reduce taxes on other gains.
But in a long bull run, it gets harder to find positions that are actually losing money. Some investors end up with mostly winners.
Long-short tax-aware investing tries to solve that. Instead of running only a long portfolio, it mixes long positions with short ones.
Managers also use leverage. The goal is to build a bigger set of trades inside one structure. With that setup, losses may show up more often, even while the investor stays tied to the overall market.
Take a common example. Say someone owns $10 million of shares in Nvidia that have risen a lot. Selling would likely create a large capital gains bill.
In a 130/30 approach, the $10 million holding can act as collateral. The investor can then borrow to buy about $3 million more in stocks. At the same time, the strategy shorts around $3 million of other stocks.
In this way, the investor keeps close to $10 million of net exposure to the market. It also creates extra holdings that can swing to gains or losses. Later, when appreciated assets are trimmed over time, those harvested losses may help offset the taxable gains.
The method is complex in practice. Still, the main point is plain: delay taxes while not stepping fully away from market exposure.
The growing wealth of technology investors also creates new tax-planning challenges, especially when major deals such as Nvidia’s $12.9 billion Hugging Face deal reshape the value of companies and the fortunes of their early investors.
Why Wealthy Investors Are Paying Attention
The space for these strategies has grown fast.
Money tied to long short tax aware approaches is close to $200 billion now. That is up from just a few billion about five years back. Quantinno and AQR stand out among the bigger names. Others have also moved into the area or looked at it. Those include BlackRock, Nuveen, Franklin Templeton, Two Sigma, and WorldQuant.
This is a big deal for investors who hold one stock in large size.
A person who founded a company might have shares worth millions. Yet selling them can trigger a very large tax bill. The same risk can hit leaders, early hires, and outside investors. It often comes from holding the position for many years.
For these people, tax planning is not only about chasing deductions. It can end up as part of the full plan for investing.
The Catch: Tax Deferral Is Not Tax Elimination
First, there is a key difference.
Most of these moves do not wipe out capital-gains taxes. They mainly delay when the taxes are due.
Later, if the investor sells assets that went up in value, and the losses are not enough to cancel the gains, a tax bill can still show up. This can feel more useful for people thinking over many years. In the U.S., inherited property may get a stepped-up basis, under current rules. That could lower the capital-gains tax on the gain that happened while the original owner held it.
So this is more of a long plan than a fast fix for taxes.
Leverage Comes With Its Own Risks
The first big worry is leverage.
With long-short portfolios, managers often borrow money to get more market exposure. This can open the door to more tax-loss harvesting. It can also make drawdowns worse when prices move fast in the wrong direction.
There are other costs too. You have management and financing expenses, plus trading fees. Quantinno takes a subadvisor fee of about 0.45% of assets. On top of that, borrowing costs and transaction charges can be much higher.
Some large custody firms have started to tighten up. Fidelity and Schwab have put stricter limits on some long-short accounts. They say the concern is leverage, and the damage that can happen when investors borrow a lot against their holdings.
What Comes Next for Quantinno
Quantinno’s fast rise shows how much tax planning matters to some of America’s top investors. Still, the next stretch may not be as easy as the first one.
So far, the plan has benefited from a strong bull market. The real stress might start in a long slump, when it is tougher to control borrowed funds, manage short bets, and keep financing costs in check.
For Kim, the goal has shifted. It is not about whether wealthy people will use complex tax tools. That part seems settled.
Now the key issue is whether Quantinno can keep delivering the same advantages while also dealing with the leverage burden, higher expenses, and the added regulatory pressure.
What happens next could decide if the firm sticks around in wealth management, or if it turns into another Wall Street idea that grew too quickly for its own stability.
The same wealth-building story extends beyond technology, with assets such as the $12 billion Yankees valuation showing how valuable major holdings can become for billionaire investors and owners.
