Menu

Updated

When Wealthfront changes the preferred ETFs for an asset class, how will we transition accounts?

When our opinion of the best ETFs in a category changes, we will change what we buy for our clients. We will stop buying the old ETF and start buying the new one with: (a) new funds deposited into the account; (b) funds freed up through selling of old instruments; and, (c) tax­-efficient sales of the alternate ETF.

If we replace an ETF with another ETF which tracks the same benchmark (e.g. as in the MUB to VTEB transition), we will take special precautions to avoid wash sales, which could be triggered by the simultaneous sale of one ETF at a loss and purchase of the other. To mitigate this possibility we will generally buy another security in the same category that tracks a different benchmark, and then wait 30 days before selling that security if it is at loss and buying the primary.

Was this article helpful?

Wealthfront prepared this article for informational purposes and not as an offer, recommendation, or solicitation to buy or sell any security. Wealthfront and its affiliates may rely on information from various sources we believe to be reliable (including clients and other third parties), but cannot guarantee its accuracy or completeness. See our Full Disclosure for more important information.

Wealthfront and its affiliates do not provide tax advice and investors are encouraged to consult with their personal tax advisor. Financial advisory and planning services are only provided to investors who become clients by way of a written agreement. All investing involves risk, including the possible loss of money you invest. Past performance does not guarantee future performance.