Exercise Tax Loss Harvesting With High-Growth Thematic ETFs

As 2022 draws to a close, investors are already looking at ways to minimize their tax burden for what’s been a challenging investment environment this year. The good news is that those losses can be deducted thanks to tax loss harvesting, as investors can use thematic exchange-traded funds (ETFs) with high-growth potential as an option for a rebound.

A glimpse at the major stock market indexes are all one needs to get a sense of what the market has been doing for most of the year. Take the S&P 500, for example, which is down about 20%.

Investors have been accustomed to seeing a sea of ​​red in their portfolios for much of 2022, but that could translate into green when it comes to tax deductions. Selling out of losing positions can allow investors to offset other sources of income—hence, tax loss harvesting.

After selling off positions, investors can use exchange-traded funds (ETFs) to set themselves up for a market comeback, whether it happens soon or not. One area that’s been experiencing heavy weakness is the tech sector, but this only opens up more opportunities in tech-focused ETFs.

Given this, Global X has three disruptive tech funds that investors can consider when looking at a tech comeback.

3 Themes for a Tech Bounceback

The first is cloud computing via the Global X Cloud Computing ETF (CLOU). Seeking to track the Indxx Global Cloud Computing Index, the fund holds a basket of companies that potentially stand to benefit from the continuing proliferation of cloud computing technology and services.

The cloud computing industry refers to companies that (i) license and deliver software over the internet on a subscription basis (SaaS), (ii) provide a platform for creating software applications that are delivered over the internet (PaaS), (iii) provide virtualized computing infrastructure over the internet (IaaS), (iv) own and manage facilities that customers use to store data and servers, including data center real estate investment trusts (REITs), and/or (v) manufacture or distribute infrastructure and/or hardware components used in cloud and edge computing activities.

Next is cybersecurity and the Global X Cybersecurity ETF (BUG). The fund seeks to provide investment results that generally correspond to the price and yield performance, before fees and expenses, of the Indxx Cybersecurity Index.

BUG seeks to invest in companies that stand to potentially benefit from the increased adoption of cybersecurity technology, such as those whose principal business is in the development and management of security protocols preventing intrusion and attacks to systems, networks, applications, computers, and mobile devices .

Financial technology, or fintech for short, is another enduring trend poised for more growth. As such, consider theGlobal X FinTech ETF (FINX).

FINX seeks to provide investment results corresponding to the Indxx Global Fintech Thematic Index. The index is designed to provide exposure to exchange-listed companies in developed markets that offer financial technology products and services, including companies involved in mobile payments, peer-to-peer (P2P) and marketplace lending, financial analytics software, and alternative currencies, as defined by the index provider.

For more news and information, visit the Thematic Investing Channel.

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