Exchange-traded funds have simplified allocations by making many asset classes available to advisors in manageable dollar amounts.
But more than that, ETFs make it possible to sell a position for a tax loss without undermining the overall asset allocation strategy of the portfolio and without running afoul of the IRS wash-sale rule. That rule says that if you take a tax loss on the sale of a security, you can’t buy a “substantially identical” security 30 days before or after that transaction.
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