Post #15249 by rnam on the Berkshire Hathaway board

Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)

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I'm confused as to how this can work.
Buying and selling that often is going to cause a lot of transaction costs, not to mention taxable gains ?

While most ETFs already sidestep capital gains by using a mechanism known as in-kind redemptions, XDIV’s strategy takes aim at a different category of tax exposure: ordinary income. The fund, which will charge a 0.0849% fee at the start, will invest in other S&P 500 ETFs, such as Vanguard’s VOO, but will exit positions just before ex-dividend dates. It will then rotate from one such index fund into another that isn’t about to pay a distribution.

That could appeal to clients who don’t reinvest payouts consistently — which can be a drag on performance — or high earners seeking to limit taxable income in brokerage accounts.

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