Incorporating exchange-traded funds (ETFs) into a tax-loss harvesting strategy offers appealing opportunities that may prove valuable to advisers in a bear market.
Without a doubt, market declines are brutal. On the other hand, down markets offer appealing opportunities for advisers to maximize tax savings for their SMAs or mutual funds through tax-loss harvesting. When advisers need to harvest losses while positioning their portfolio for long-term health, ETFs can be a powerful tool.
Tax-loss harvesting has gotten easier in recent years as ETFs have taken off in popularity. Advisers can more effectively sell their holdings as needed and invest those proceeds in similar exposure or target new markets. ETC manages over $5.2 billion across more than 60 ETFs [1] with a variety of strategies that could make a potentially great swap.
What is tax-loss harvesting?
Tax-loss harvesting is a strategy that involves selling securities with unrealized capital losses to offset these losses against realized gains or to carry forward to future tax years.
Consider ETC’s Funds for a Tax Swap
A tax swap can serve as a placeholder to maintain exposure to the asset class for 30 days.
ETC currently advises or sub-advises 61 ETFs that include attractive thematics, such as emerging markets e-commerce and retail, metaverse, AI and robotics technology, green energy, medicinal drugs, and many more.
Our ETFs also offer exposure to many different styles of investing, including growth, value and momentum, and to different asset classes such as commodities and domestic or international fixed income.
ETFs Can Present Opportunities
ETFs can give advisers a place to redeploy proceeds or reposition their portfolios in a similar strategy. For example, selling large-cap to buy small-cap, value to buy growth, or momentum to buy value.
Investors may reallocate across asset classes, sell equities to buy fixed income, commodities to buy real estate, or take this opportunity to purchase attractive thematics.
Deploying tax-loss harvesting in thematic and other strategies offered by ETC may be a fit if you have a loss in for a client. Don’t let market opportunities pass you by, contact ETC to learn more about our ETFs.
[1] As of October 31, 2022.
Exchange Traded Concepts (ETC) does not provide tax advice. This is for informational purposes only. Each investor should consult their own tax advisor concerning the tax consequences of any investment strategy they make or are contemplating.
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