Many of the ETFs we support have alternates. These alternates help us to improve your returns and/or save you on taxes, depending on whether your account has Tax-Loss Harvesting enabled. Each alternate ETF we select has high returns correlations, similar volatility, and similar expense ratios to the primary ETF.
Note that some ETFs don’t have Tax-Loss Harvesting alternates. In a taxable Investment Account, you can determine whether an ETF has an alternate by checking for an “Alternate” section within the ETF’s detail page. If the ETF doesn’t have an alternate, the “Alternate” section won’t be displayed.
Accounts with Tax-Loss Harvesting
As part of our tax-loss harvesting strategy, if one of your ETFs declines in value, we’ll purchase its alternate to harvest the losses. To avoid triggering the wash-sale rule, we make sure to select alternate ETFs that track different indices than the primary ETFs.
Accounts without Tax-Loss Harvesting
If you’ve customized your portfolio, we may purchase the alternate ETF instead of the ETF you’ve specified. We do this to maximize the amount of cash invested — so you won’t have as much idle cash sitting around.