Hi - I am trying to see if my understanding on taxation of strategy or actively managed ETFs is right in the US. I now that in other countries it is possible to not pay taxes on rotations until you finally sell equities for cash, but at least in the US I wanted to verify my understanding below. I have read through the statutory filings for DUDE as an example. https://alphaarchitect.com/wp-conte...etf/statutory_prospectus/MAI_BOB_DUDE_Pro.pdf. Trying to understand how short term capital gains on these types of ETFs affect a long term holder of the ETF. From the prospectus, it seems that if a strategy rotates stocks regularly that it will have short term capital gains. The short term capital gains are then passed to the ETF holder at different times depending on the ETF distribution and record date. Even if you hold DUDE for many years, you will have short term capital gains in a taxable account due to the stock rotations - similar to dividends or interest in the case of FI ETFs. Presumably the strategy/manager will have wash sale filters such that they are not repurchasing securities they have held in the last 30 days over year ends, that they had a loss on (or is this not necessary because they just manually adjust their basis?). You will also have a potential long term capital gain / loss when you finally sell the ETF. If however you buy and sell DUDE in a window that does not pay out a distribution you will not be subject to the passthrough capital gains / losses of the buys and sells they have made in the fund as they are not making a distribution to you even though it swapped weekly. Eventually someone else will get get the distribution gain or loss if they are holding it on record date. You will pay Taxes based on your holding of the ETF in this example - STCG. In essence what is happening in these type of strategy ETFs is no different to when an index ETF needs to drop names because the benchmark they follow changes and they have to sell name(s) in order to match the new composition. It seems to me that in the end - Strategy or Actively managed ETFs are more suited for Tax Deferred accounts where the short term capital gains are not taxed. Did I get that right?