Envestnet, Inc. announced that Envestnet | PMC (PMC) has rolled out an update to its Tax Overlay Services offering. With this enhancement, financial advisors can apply customized, ongoing tax-optimization approaches to the bulk of client assets within a unified managed account, dramatically increasing the assets eligible to be diversified out of low-cost-basis shares. Tax Overlay Services had traditionally enabled an advisor to manage a UMA in accordance with the individual client's long-term capital-gains tax budget, and minimize exposure to short-term capital gains, while tightly adhering to the intended manager/UMA model by limiting tracking error. To accommodate advisors with clients whose portfolios are unable to meet these tracking error requirements, and may contain significant holdings that are not included in their intended manager/UMA model, PMC has developed the Portfolio Diversification Service. This innovation enables the PMC platform to apply Tax Overlay Services to UMAs with a higher degree of deviation from their models, as long as the assets are held within the Quantitative Portfolios managed by Envestnet'sQuantitative Research Group team. These portfolios are low-cost, indexed strategies with a large number of holdings, which gives PMC the ability to hold a greater percentage of non-model holdings and manage tracking error to more reasonable levels. As a result, UMAs can transition into the target model over the course of seven years, giving the advisor the flexibility to spread out tax consequences for the client. The Portfolio Diversification Service also makes this capability available to clients who are transitioning low-cost-basis equity mutual funds and exchange-traded funds to new models. By holding out-of-model equity mutual funds and ETFs in the QP sleeves, PMC is able to sell them over multiple tax years rather than liquidating them at the account's inception.