Tax-loss harvesting intermediate-term funds using short-term Treasury?

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CFM300
Posts: 2305
Joined: Sat Oct 27, 2007 5:13 am

Tax-loss harvesting intermediate-term funds using short-term Treasury?

Post by CFM300 »

I'm planning to tax-loss harvest my holdings in two bond funds:

* Intermediate-Term Treasury Index Fund
* California Intermediate-Term Tax-Exempt Fund

For simplicity, I was thinking of using Short-Term Treasury Index Fund as the partner for both, and then switching back after 31 days.

The 30-day SEC yield of short-term Treasury is about halfway between the two intermediate-funds, so I guess the primary risk would be a run-up on one or both intermediate-term funds greater than on the short-term. That doesn't strike me as a huge risk.

Thoughts?
mega317
Posts: 4941
Joined: Tue Apr 19, 2016 10:55 am

Re: Tax-loss harvesting intermediate-term funds using short-term Treasury?

Post by mega317 »

I agree, I don't think you'll suffer much.
One schmancy option is exchange the intermediate funds with some long and some short or money market to average the same duration. Over 30 days is not likely to matter though.
https://www.bogleheads.org/forum/viewtopic.php?t=6212
Topic Author
CFM300
Posts: 2305
Joined: Sat Oct 27, 2007 5:13 am

Re: Tax-loss harvesting intermediate-term funds using short-term Treasury?

Post by CFM300 »

mega317 wrote: Fri May 13, 2022 11:51 pm One schmancy option is exchange the intermediate funds with some long and some short or money market to average the same duration.
Thinking about duration, I guess I could just use...

100% Total Bond Market (VBTLX)

or

50% Total Bond Market (VBTLX)
50% Intermediate-Term Tax-Exempt Index (VWIUX)

Both options, when blended with my other portfolio holdings and then back-tested, have produced returns that are almost identical to my current position.
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