Tax Loss Harvesting With ETFs

Okay, Lance, we have a final question before you leave. Tax loss harvesting is a powerful ETF strategy. It can help investors to reduce the tax bite and maybe even get rid of underperforming investments. How might advisors and investors leverage AAM's ETFs with a tax loss harvesting strategy?

Well, Stephanie, full disclosure, I am not a tax expert. Obviously, your listeners and viewers should seek out the expertise of professionals to answer that question. But what I will say is this is a conversation that comes up quite a bit as we talk to financial advisors. Tax loss harvesting is something that many financial advisors and retail investors utilize going into year end.

Unfortunately in 2025, with equity markets being very strong, the opportunity to realize losses and carry forward and change your portfolios are quite minimal. But what I will say is what we've seen recently, and there was a Schwab Asset Management report that recently came out, and it alluded to the idea that with equity markets being up, many mutual fund investors that are anticipating capital gains taxes later on in 2025, they are using this as an opportunity to essentially sell out of mutual funds, realize those gains, and then migrate into an ETF, which happens to be more tax efficient from the capital gains perspective, mainly because of the use of custom in-kinds creates and redeems.

So again, while we're seeing tax loss harvesting happen, the opportunity to do so in this environment is minimal, but that's not stopping investors from essentially selling less tax beneficial wrappers and using that to deploy into the ETF wrapper that, with over 4,000 ETFs, no matter what you're invested in a mutual fund, generally speaking, there's probably something that's very comparable in the world of ETFs.