Reinhard

Active ETFs: A Race to the Starting Line

I agree that an actively managed ETF would be a huge development. Although some ETFs that have futures or trade inversely seem to have adopted some complex strategies already. Of great advantage seems to be the tax situation. I heard that if the investor holds the ETF for longer than a year, he has to pay only the long-term capital gains tax rate. This even if the fund uses options, shorts which are normally taxed at short-term rates. Similar with frequent trading of the fund manager, would a long-term investor be shielded from the short-term capital gains taxes? This almost sounds too good to be true, and every active manager would want to open an ETF. I certainly would want to. But am I correctly informed? Or will the IRS close in on this and adapt rules similar to mutual funds in that there will be short-term capital gains distributions required?