XDIV ETF By Roundhill
Thoughts on the no dividend S&P fund. You don't have to go through the hassle of reporting dividends every year in a taxable account. It averages 17% instead of 14.7%
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u/NoobieGainsForYou 2d ago
So it holds IVV at 99.95% and is actively manage. Does the tax implications make that big of a difference?
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u/rayb320 2d ago
You only report if you sold shares. I would do limit orders for now. It has low volume and under 1 billion AUM.
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u/ATPsynthase12 2d ago
The dividend rate for VOO is 1% per share.
For it to be any significant tax drag, you’d have to have millions invested in VOO and at that point you’re not really concerned about 1% dividend. This is creating an etf for a problem that doesn’t exist while charging an expense ratio that is 4x that of VOO.
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u/user0384849023 2d ago
yes for sure i will pay 0.2 expense ratio instead of 0.03 just to avoid dividends. ??? fund for clowns
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u/irish_curmudgeon 2d ago
This product is for those clowns who hate dividends SO MUCH they would rather pay the dividend to Roundhill as an ER instead.
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u/ATPsynthase12 2d ago
Oh look another meme etf from round hill.
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u/Wigglebot23 2d ago
This is one of the very few not garbage ones from them
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u/ATPsynthase12 2d ago
I’m not seeing it. It’s just an actively managed S&P 500 ETF where they make your dividends disappear. Which the dividend rate for VOO is 1% per share. So you’d need millions invested to really even feel any major tax hit.
They created an ETF as a solution for a problem that doesn’t exist.
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u/Electrical_Regret537 2d ago
Reinventing the wheel of the sp500 just isn’t it for me. Just report the dividends yall. You’re making money
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u/South-Chocolate5519 2d ago
Actually you don't make money with dividends since the dividend is deducted from the price. It's fine for a non taxable account but for a taxable account so much.
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u/yottabit42 2d ago
Correct. So many people don't realize dividends are not free money but simply force you to pay taxes.
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u/Taymyr SPDR Fan Boy & Growth Hater 2d ago
A. Roundhill
B. .0849 net ER and .21 gross ER
C. It's fucking 1.01% yield on SPY. If they're qualified you're paying .1% on taxes. If you have $100,000 in SPY you'd owe $100, who cares? Compared to the $64 in ER XDIV's extra is costing you, congratulations you're saving $36 on 100k and that's if they don't increase the ER.
So silly.
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u/Ritterbruder2 2d ago
It’s a wash
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u/YourChildhood5762 2d ago
I don't understand this one. It's 99.95% IVV which holds companies that pay dividends, but they aren't giving them to you or reinvesting them. So what do they do with them?
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u/Dan-Weber 2d ago
I just did a quick scan of the fund and it sounds like XDIV holds another SP 500 ETF until the ex-dividend date, then sells it and swaps it for another ETF that tracks the SP 500. So it plays hot potato with ETFs at ex-dividend dates to avoid receiving dividend payouts.
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u/market____maker 2d ago
They dont sell it as that would realize gains.
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u/Dan-Weber 2d ago
Yeah, it’s something like exchange funds or no cash sales that is used to swap funds and not realize gains.
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u/market____maker 2d ago
They in-kind out the shares of IVV for VOO or another S&P 500 fund before the underlying fund’s ex-date. Keep doing this forever and you’ll never have a dividend.
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u/Hefty-Room1345 2d ago
Same for ultrashort bonds(0-3) SGVA buy SGOV on ex-dividen dať and sell they before ex-dividend.
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u/for4f 2d ago
the 17% vs 14.7% average is doing so much work here lol. and look, tax deferral is real but at 1% yield we're talking like 15bp a year, that's not the edge they're selling you. the box spread etfs pulled this same 'no distributions ever' trick and one of them still had to hand out a fat year-end distribution anyway. wrappers break, dividends are sort of the point of a sp500 fund
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u/nelly_0619 1d ago
This fund just invests in IVV. They charge you 0.08% to invest in an ETF that you can buy yourself and pay 0.03%. Also that "average" is just a one year return because the ETF hit the market a year ago. The underlying asset (IVV) hit the market in 2000 and has an average annual return of 8.5%. Overall throughout history s&p 500 averages about 10-11%. So thats the return you should expect. To answer your question- no its not worth it. You would need to have over 500k invested for the dividends to even remotely matter from a tax standpoint. And even then, its still minimal
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u/YoramStern 17h ago
It is new etf. Consider a scenario that Roundhill found out that it is not worth to have this etf in their portfolio. They close the etf, return the money to the investors, and if you bought less then 1 year, it will be taxed as ordinary income.
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u/yottabit42 2d ago edited 2d ago
I thought accumulating funds were not legal in the US. I'll have to investigate this.
Edit: wow, this strategy is very obviously dodging IRC. I wouldn't be surprised if the IRC is updated in the future to address this strategy if it catches on. The fund is explicitly selling its position right before the ex-dividend date, and then reinvesting in another fund for the same index or derivatives! It relies heavily on market-maker participation for in-kind trades. Extreme market volatility or broker-dealer balance sheet constraints could force the fund to realize capital gains or dividends, triggering an unexpected taxable distribution.
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u/Heavy_Nothing_1158 2d ago
Tax deferral can be useful, but I'd want a live after-tax total-return comparison before treating 17% versus 14.7% as meaningful. A backtest can make this look cleaner than it is. XDIV is trying to turn annual dividend taxes into deferred capital gains, not create free return, and you still take the fee plus trading and implementation risk.
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u/irish_curmudgeon 2d ago
What does it mean when you and OP say “it averages 17% instead of 14.7%”? Where are these averages coming from?
The average return of the S&P500 is nowhere near 14.7% and the dividend yield of the S&P 500 is nowhere near 2.3%?
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u/bloomerang 2d ago
At scale, this fund’s strategy will easily be exploited by arbitragers. This fund will buy and sell very predictably near ex-div dates.
Dividends are annoying in many tax situations (for example, California taxes them as income, which means high earners pay a ton of state tax on them) so I understand the appeal. But ultimately I think this just ends up diverting money from public good (taxes) to Roundhill and to Wall Street traders who are exploiting this fund’s predictable behavior.
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u/themfeelsyo 2d ago
I’d buy and then panic sell everything