The periodic pretax performances of funds are routinely reported; they provide a standard, objective basis to compare managers. In contrast, after-tax results are largely ignored, possibly because the current approaches are defective. The key to a satisfactory measure of after-tax performance is the proper definition of after-tax value. The pretax value and the after-tax sale price are obviously misrepresentative. We propose the “tax-smart” value, which is the greater of the after-tax sale price and the hold value. As illustrated by examples for municipal bonds, the resulting
measure pinpoints managerial actions which would improve after-tax performance.