Leveraged ETFs in Tax-Advantaged Account

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This topic contains 4 replies, has 3 voices, and was last updated by  R D HATHCOCK 1 week, 1 day ago.

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  • #67368

    lthreatt
    Participant

    I recently transferred a Traditional IRA from a RoboAdvisor to Fidelity and intended to use a variation of the Max Drawdown less than 10% portfolio. However, I wasn’t aware until today that some leveraged ETFs are set up as Limited Partnerships and generate K-1s instead of 1099s. Fidelity permits leveraged ETFs in my IRA but I’m wondering if I should re-think my portfolio. Do any of you with a tax-advantaged account receive K-1s and is it really that big of a deal in terms of taxes?

    #68465

    Alexander Horn
    Keymaster

    Could you give me some example of the ETF which you are concerned about? For most we have now identified non K-1 alternatives, albeit with lower trading volume.

    #68547

    lthreatt
    Participant

    It was EUO and CROC in the Leveraged Gold Strategy. In hindsight I think the K-1 “issue” is because these are currency ETFs. I was mainly interested to see if anyone can comment on the U.S. income tax “hassle factor” of getting a K-1 versus a 1099.

    #68605

    Alexander Horn
    Keymaster

    There are no good non-K1 alternatives to EUO and CROC, so maybe you rather use the alternative Gold strategy, which serves nicely as a hedge mixed with equity heavy strategies, albeit at lower returns: https://logical-invest.com/app/strategy/gld-uup/gold-currency-strategy-ii

    #70373

    R D HATHCOCK
    Participant

    i have owned croc and euo off and on in my IRA/401k. I get the forms but the ETF holder does not know if you are in a taxable or nontaxable account. I just throw them away. BTW I owned EUO when Brexit vote passed a couple of years ago…that was sweet.

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