Imagine VOO. Folks (like me) buy and sell the VOO ETF and behind the scenes Vanguard takes the steps to periodically rebalance the index. It's my understanding that this rebalancing happens on dates known in advance. As owners of the ETF, we hope not to see capital gains triggered by these rebalancing events because that means taxes. My question is, how this rebalancing happens and is there some aspect around the ETF construct which allows vanguard to (say) sell a stock at a profit (as part of the rebalancing) yet somehow not pass that capital gain back to folks holding the ETF? Or is vanguard leveraging tax loss harvesting as a means to counter capital gains and thus not pass gains to folks holding VOO?
If vanguard is leveraging tax loss harvesting to counter gains in order to prevent capital gains from being passed on to VOO holders, can vanguard shuffle, behind the scenes, those tax losses between different ETFs or must those losses remain associated with the stocks tied to VOO?
Just trying to understand the details here...
Submitted November 20, 2021 at 10:21AM by SeaworthinessOk4046 https://ift.tt/30FJmPe
