Sofia L. Massie, CEO of LionShares, LLC, joined Keith Black, Managing Director of RIA Channel, to discuss a total stock market ETF that seeks to improve tax efficiency.
LionShares recently launched the LionShares U.S. Equity Total Return ETF (TOT). The ETF tracks the total return of the total U.S. stock market. Rather than distributing dividends to investors, the ETF seeks to minimize distributions to compound the total return. Dividends distributed from funds are taxable income. The goal is to create a fund that is attractive to long-term, tax-sensitive investors.
Massie’s background includes a role as a quantitative trader at Jane Street, where she traded ETFs and ETF options, which facilitated the operation of many ETFs. While there are an increasing number of funds seeking to maximize distribution yield, Massie noticed a market gap for funds seeking to minimize yield, costs, and taxes.
The TOT ETF holds ETFs that track the total stock market and uses strategic rebalancing to reduce the need to pay dividends to investors. This strategy is unique to ETFs, as the structural opportunity can’t be offered in a mutual fund or hedge fund strategy. Investors can use the TOT ETF as a long-term core holding that provides access to the entire market capitalization range of the U.S. stock market.