With the final quarter of 2022 underway, investors can already start thinking about how to reduce their tax burden when April comes around next year. As such, it’s never to soon to start implementing tax loss harvesting and getting into exchange traded funds (ETFs) that offer high growth potential.
“Tax-loss harvesting (TLH) is a strategy to lower current taxes paid to the U.S. federal government by deliberately selling an investment at a loss—i.e., deliberately taking a capital loss—in order to use that loss to offset taxes owed on an investment sold at a profit—i.e., a capital gain—or even taxes owed on personal income,” an Investopedia article succinctly explained.
“The investment can be any tradable security (stocks, bonds, shares in an exchange-traded fund) or even cryptocurrencies,” Investopedia added.
Speaking specifically about ETFs, investors can look at thematic funds that can offer high growth potential to set themselves up for future gains. Global X has three funds worth considering that offer enduring themes in the next decade.
3 High-Growth Options
One of the themes during a rough 2022 for the markets has been the continued emphasis on environmental, social, and governance (ESG) initiatives. Reducing the world’s carbon footprint, in particular, has been getting increased attention, making ETF plays like the Global X CleanTech ETF (CTEC) stand out.
At a 0.50% expense ratio, CTEC seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Indxx Global CleanTech Index. The index provides exposure to exchange listed companies that are positioned to benefit from the increased adoption of technologies focused on improving the efficiency of renewable energy production and/or mitigating the adverse environmental effects of resource consumption.
With a rise in the use of electric vehicles (EVs), another fund to consider is the Global X Autonomous & Electric Vehicles ETF (DRIV). DRIV seeks to invest in companies involved in the development of autonomous vehicle technology, electric vehicles, and EV components and materials, including companies involved in the development of autonomous vehicle software and hardware, as well as companies that produce EVs, EV components such as lithium batteries, and critical EV materials such as lithium and cobalt.
Piggybacking off the EV theme, this could cause an increase in the use of lithium, which offers a backdoor play on the rise of EVs. As such, investors can consider the Global X Lithium & Battery Tech ETF (LIT), which seeks to provide investment results that correspond generally to the price and yield performance of the Solactive Global Lithium Index, which is designed to measure the broad-based equity market performance of global companies involved in the lithium industry.
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