"ETFs can be a good fit for the strategy," Michael Iachini, managing director, ETF Research, Charles Schwab Investment Advisory, said.
Iachini also notes that the IRS is "tightlipped about what 'substantially identical' means," so it is prudent to consult with your tax expert before utilizing this strategy.
Before you enter into the new fiscal tax year, consider taking advantage of your unrealized capital losses to help ease the tax hit on capital gains this year. Instead of selling an underperforming security and letting the cash sit in the sidelines for a month while waiting for the wash-sale period to expire, look for a good ETF substitute to help capture a potential upside in the markets.
For disclosure: We are not tax professionals, so please consult a tax professional for guidance that relates to your portfolios.