Fund Manager: When It Comes To Tax Reform, Investors Need To Be 'Thinking About The Changes Under The Hood'

President Donald Trump's proposed tax reform plan could add a tremendous boost to an already hot stock market, Michael Alison said during a recent CNBC "Trading Nation" segment.

Tax reform will obviously help boost corporate earnings, especially for the many companies with high tax rates, Alison, an Eaton Vance fund manager who helps oversee $405 billion in assets, explained. As a whole, tax reform could add at least another 5 to 10 percent to stocks, if not more. But there's more to the tax reform package then simply seeking out which companies will benefit more than others. In fact, investors should be "thinking about the changes under the hood."

A tax reform package will likely be accompanied with "less visible and less apparent" changes that shouldn't be ignored, he said. Specifically, a tax reform package could make it more favorable for companies to accelerate depreciation on capital expenditure, the dis-allowance of some or all interest expense and deductibility of dividends paid to investors.

But until a finalized tax reform plan is finalized by the president and then passed by lawmakers, there's still a lot of distracting noise which causes confusion among investors in figuring out "what is real, what is fiction, what is perception, what is reality" Alison added.

In the meantime, the market would appreciate a certain degree of "semblance of certainty" as the final tax reform proposal continues to be debated.

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