On Wednesday, LionShares made its debut in the ETF space with the launch of the LionShares U.S. Equity Total Return ETF (TOT).
TOT is an actively managed fund that looks to offer capital growth over a long-term time horizon. Despite being an actively managed fund, TOT has a relatively low net expense ratio of 0.0749%, following a fee waiver.
Trading Dividends for Lower Tax Drag
Where TOT looks to stand out from the competition is through the fund’s approach to dividends and taxes. To put it simply, TOT’s portfolio philosophy focuses on not paying dividends in order to minimize overall tax drag. By doing so, the fund can mitigate the long-term tax impact that investors often see from dividend-paying equity strategies.
TOT gains its exposure to the equity market mostly through the use of other exchange traded funds, operating as a ‘fund of funds.’ However, TOT may also invest in options and futures on different large-cap U.S. equity indexes at the portfolio team’s discretion.
“Many investors prefer to reinvest dividends as soon as possible. What they truly seek is exposure to the total return of the market,” noted Sofia Massie, founder and CEO of LionShares. “Often overlooked, tax drag can quietly erode investors’ performance compounding for years. We looked to eliminate this obstacle at the foundation of the ETF’s design by removing distributions. Our goal with this innovation is to provide investors with a more efficient product to achieve their long-term investing objectives and give back control over the timing of taxable income.”
With the long-term U.S. outlook remaining uncertain, flexible actively managed ETFs could be in a good position to meet the moment. Better yet, TOT’s innovative approach to tax efficiency could thus help it stand out from the crowd as a cost-effective vehicle for long-term gains.
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