[DeRock]

This is the question I have too. The ability to create a "custom" ETF is highly desirable to me. I don't want to trade individual stocks, but instead would rather input some weightings on top of existing indexes (i.e buy less of stock A, more of stock B, etc.). However, my understanding of ETFs is that they are able to rebalance through "in-kind" creation/redemption in order to avoid creating a taxable event. I'm not sure how this is possible to scale to a custom one-off fund...

[jjmaxwell4]

You are correct the in-kind creation/redemption pushes any taxable gains/losses to the trading of the ETF by the holder, not the ETF itself.

But there are some benefits to doing what you refer to as a "custom one-off fund". Namely we can Tax Loss Harvest any losses and realize those to offset gains we realize in the name of rebalancing. The industry generally calls this direct indexing and wealth clients with $1M and above portfolios have been doing it for years.

We also provide the option of entering a "Buy & Hold" optimization for strategies, which would not rebalance your winners into losers and realizing any gains or losses, but your portfolio will drift over time if you choose this.