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?

Nothing in this blog should be construed as tax advice, a solicitation or offer, or recommendation, to buy or sell any security. Financial advisory services are only provided to investors who become Wealthfront Inc. clients pursuant to a written agreement, which investors are urged to read carefully, that is available at www.wealthfront.com. All securities involve risk and may result in some loss. For more information please visit www.wealthfront.com or see our Full Disclosure. While the data Wealthfront uses from third parties is believed to be reliable, Wealthfront does not guarantee the accuracy of the information.