Consequently, if an investor has experienced losses in integrated oil, oil producer, oil services stocks or broad energy-related ETFs, one may sell off the position and look to another energy sector ETF as a suitable alternative in a tax-loss harvesting strategy.
“Sector ETFs are useful vehicles for tax-loss harvesting,” Baiocchi said.
For example, the Fidelity MSCI Energy Index ETF (NYSEArca: FENY) acts as a cheap sector play on energy companies. FENY tries to reflect the performance of the MSCI USA IMI Energy Index, which tracks the energy sector in the U.S. equity market.
Investors seeking alternative investment picks to capitalize off a tax-loss harvesting strategy may also turn to Fidelity’s tax-loss harvesting tool to find the right alternative investment to replace a losing position.
For more information on ETFs, visit our taxes category.