How is Tax Efficiency calculated (the Tax Profile panel)?

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The Tax Profile (Est.) panel in the Strategy View's Return Statistics shows how tax-friendly a strategy's trading actually is - how many of its realized gains qualified for long-term capital-gains treatment versus being taxed as short-term gains at ordinary income rates.

Rather than guessing from turnover, we run a realization-based simulation of what a real account would have done:

Each month's target weight changes are converted into actual sales (when a position's drifted value exceeds the next month's target) and buys (when it's lower).
Every sale's realized gain is computed as sold value minus cost basis, using the average-cost basis method across that ticker's accumulated shares.
Each realized gain is classified by holding age: short-term if held under 12 months, long-term if 12 months or more.
At the end of the selected window, any remaining positions are bucketed as if liquidated that day, classified by their current age.

The panel reports, for the date range you've selected:

ST trades / LT trades - counts of short- and long-term realizations
ST / LT avg hold - average holding period in months for each bucket
ST / LT gross gain - total realized gains in each bucket
LT Gains % - the headline number: the share of all realized gains that were long-term

A higher LT Gains % means more of the strategy's gains get the favorable long-term rate. This percentage is also what the Taxable Account toggle uses to blend your short-term and long-term tax rates when estimating after-tax returns - so the two features share one consistent model.

Two limitations to be aware of:

The panel needs at least 12 months of allocation data in the selected range to classify gains; with less it shows "Not enough data" rather than a misleading number.
Blended (custom) portfolios are analyzed from their net ETF weights. When two sleeves trade the same ticker in opposite directions, those offsetting trades net out and may be under-counted, so blended results are a slight approximation.