Use U.S. Treasury ETFs for Tax-Loss Harvesting Opportunities

With the end of the year rapidly approaching, it’s time again to consider tax-loss harvesting opportunities. So, it may be an opportune time for investors to consider where they can best capture potential tax benefits. Considering long-dated Treasuries’ performance over the last two years, one option is U.S. Treasury ETFs.

Treasury ETFs maintain U.S. Treasury exposure while realizing losses for tax purposes. They offer stable duration exposure, so investors can target any spot on the yield curve with greater precision.

See more: “Americans Continue to Invest in Treasuries

Tax loss harvesting involves investors selling investments at a loss to offset gains and reduce their tax liability. The investor uses the money from the sale to buy an investment that fills a similar role in the portfolio.

By realizing losses, they can minimize capital gains taxes and potentially lower their overall taxable income. This helps optimize portfolios for tax efficiency and improve after-tax returns.

Tax Loss Harvesting with BondBloxx U.S. Treasury ETFs

BondBloxx offers a suite of eight duration-specific U.S. Treasury ETFs that range in duration from six months to 20 years. They track a series of indexes that include duration-constrained subsets of U.S. Treasuries with more than $300 billion outstanding. They’re designed to track indexes that achieve target durations using U.S. Treasury securities instead of specific maturities or maturity ranges.

The ICE US Treasury 7-10 Year Index is down 4.5% year-to-date as of Oct. 31 and down 18% over the last two years. So, investors with exposure to intermediate Treasuries may want to sell their existing positions and reinvest that capital elsewhere.