At J.P. Morgan & Co.'s private bank, tax time is not the moment to start worrying about taxes.

The bank's portfolio managers work to convince their clients to be concerned about tax liability long before April 15-and before they allocate their funds to investments.

"There is only one thing you can do about your 1996 taxes: pay them," said Jean L.P. Brunel, J.P. Morgan managing director and the bank's chief investment strategist for private clients worldwide.

Mr. Brunel and colleague Gordon Fowler have been working for three years to get more clients into "tax-aware" strategies, which seek to curb tax liability by limiting realized gains on trades in portfolios during a given year.

The bankers say they are pushed by clients' growing recognition that blindly seeking absolute return can result in a big hit to their wallets come tax time.

"Experience indicates that taxes will not take care of themselves. One out of eight funds beat the S&P 500 after taxes," Mr. Brunel said.

Many J.P. Morgan clients have already elected to use tax-aware strategies. After rolling out two tax-aware mutual funds earlier this year- the JPM Pierpont Tax Aware Disciplined Equity Fund and the JPM Pierpont Tax Aware Equity Fund-assets under management in the strategies top $10 billion.

J.P. Morgan's timing is right, according to the Institute for Private Investors, a New York-based networking, education, and research organization for wealthy individuals and their advisers.

Seventy percent of its nonadviser members, who each have at least $10 million of assets, stated in a survey last year that they expect their equity managers to manage portfolios with taxes in mind.

"In the old days, everyone looked at managers' net of fees, but on a pretax basis," said Robert Rowan, director of the Institute for Private Investors.

"What they began to find is some of the managers began to look very different on an after-tax basis," he added. "Fees and taxes are two of the biggest things that weigh down their portfolios."

In the survey, the average institute member rated the importance of tax implications a 3 on a scale of 1 to 5. The track record of money managers rated a 4.2, while fees rated less than 3.

"People are getting more sensitized to the effect of taxes," said Mr. Fowler, J.P. Morgan's managing director for U.S. private client investment management. "And if we have a less spectacular or normal stock market, people are going to be looking at ways of adding value."

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