Tax Alpha Isn’t Just for Index Funds
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1/ Imagine you manage an ETF that bought $CRCL at IPO at $31. It rips to $300. You want to reduce exposure or exit, but doing so would saddle shareholders with huge capital gains.
2/ Here’s where the ETF structure shines. Through in-kind redemptions, you can remove low-cost-basis positions from the portfolio without triggering a taxable event.
3/ Using a "heartbeat trade," a temporary redemption and re-creation of shares, you can flush CRCL at its $31 basis.
Still like the stock? You can buy it back later at $230 or any other price, now with a fresh (higher) cost basis.
4/ The result: you’ve realized gains inside the fund without taxable consequences to shareholders and you’ve reset the cost basis to reduce future tax drag.
5/ This isn't just theoretical. Active ETFs can use this strategy to manage risk, rebalance exposure, and preserve after-tax returns.
6/ Conclusion:
When high-flyers become unmoored from fundamentals, these tools can help us stay disciplined without punishing investors.
$NODE executed one such heartbeat trade today, using the ETF structure to manage risk, capture gains, and minimize tax impact.
Learn more about NODE at
@_bus_bus_bus 🤝
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