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Get in Early: Tax Loss Harvesting Opportunities Are Spiking

BY | ETF Database
09/17/2026 | 26 VIEWS
Last minute shopping, cold weather — tax loss harvesting? Many investors and advisors are used to harvesting losses from their investments in the holiday season. With so much going on in bond markets, however, it may be worth getting a head start on tax loss harvesting this year. Both corporate and muni bond ETFs are providing some appealing opportunities to do just that, in funds like, for example, the American Century Diversified Municipal Bond ETF (TAXF ).Key Takeaways: Tax loss harvesting presents some big opportunities to refresh portfolios, and starting now may have benefits. As global yields, debt, and risk increase, many investors may have fixed income opportunities to harvest. TAXF and other muni and corporate bond ETFs offer great reinvestment opportunities when harvesting. As a refresher, tax loss harvesting entails selling an asset at a lower price than it was initially purchased. That includes equities and fixed income investments. Recent, shifting economic factors have increased the opportunity to do so, especially in the latter category. Specifically, a combination of global debt, sticky inflation, geopolitical risk have driven yields much higher. With rising rates overall, the ground has shifted under countless bond portfolios. Investors, then, may want to refresh their holdings — and tax loss harvest those investments that are now negative. That’s where corporate and muni bond ETFs come in. The latter category had a particularly difficult time this summer, leaving investors eyeing other investments. TAXF could prove an appealing option to reinvest harvested assets from other muni funds. American Century Investments’ Senior Portfolio Manager Joe Gotelli and Vice President, Senior Portfolio Manager Jason Greenblath explored that topic in a recent piece of analysis. The duo emphasized the ETF wrapper as an important attribute that benefits tax loss harvesting efforts. “Because ETFs generally don’t need to sell bonds to meet daily redemptions, they are less likely to realize gains during routine portfolio management. An investor selling ETF shares doesn’t force the fund to sell bonds,” they wrote. “Therefore, liquidity for the investor doesn’t translate into taxable activity for the fund.” See more: American Century’s Greenblath Talks Fed, Yen Impact on Corporates The strategy charges a 25 basis point fee to actively invest in munis. Muni bonds, generally tax exempt as they are, can help lower the tax bill of an overall portfolio. TAXF can, therefore, help reduce overall tax impact while also performing well. The fund provided a 30-day SEC unsubsidized yield of 4.05% as of August 31. It also offered a 3.88% 12-month distribution rate as of the same date, per American Century Investments data. Tax-loss harvesting opportunities abound right now amid those serious fixed income shifts. While tax loss harvesting, investors should beware the wash sale rule and avoid reinvesting directly into substantially similar investments. With yield opportunity proliferating and many older fixed income investments dampened, it may be worth acting now rather than waiting for the holiday harvest. For more news, information, and analysis, visit the Core Strategies Content Hub.

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