彭博独家：外资借ETF调仓规避美股股息税

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You're listening to Bloomberg Business Week with Carol Masser and Tim Stenc on Bloomberg Radio. It is today's big take. It's one of the most read stories on the Bloomberg terminal. It is a Bloomberg exclusive. I'm just going to read the beginning of it because I think this does a very good job of describing what exactly is going on in this intricate world of ETFs with different letters. Every 3 months, like clockwork, investors pull $40 billion or more from Black Rockck ETF that tracks the S&P 500, deposit most of it into a near identical Vanguard product.

A few days later, they reverse the trade and the money flows back the other way. We are talking about VO and IVV. Those are the tickers. The Black Shares, Black Rockck eyesshares, core S&P 500 ETF and the Vanguard S&P 500 ETF. On the buy line, Zach MIT a reporter for Bloomberg News. Also with us, Denita Seikova, cross asset reporter for Bloomberg News. They both join us here in the Bloomberg Interactive Brokers studio.

It's all about taxes, Zach. How do why what are they avoiding here and who are who is moving this money?

Right? So there's this massive movement in the market. People are going into going out of one position into another one and then back. The reason is these are foreign investors who want to avoid tax on the dividend. So just before the date when they would be owning that ETF would entitle them to the dividend, they sell it. They buy an almost identical ETF, hold it for a couple days, and then sell that one and go back to the one they were in before.

Does it only happen in a month where there are gains?

It it happens right around the dividend date, which is four times a year. Okay. So, every quarter on a certain predictable date is is the date when you owning the ETF gives you the right to get that dividend. They don't want the dividend, so they just sell before and then switch into something else. and then buy after. It's very It's very clean.

Well, you really put into perspective because in the article you say the pattern is so big that it stands out in the $16 trillion US ETF market. Uh Denise, I wonder how long has this been going on?

We started noticing around September 2024, but you can see especially in the past year, it's been more and more evident. We're talking about billions moving out of those ETFs. These are two of the most liquid ETFs in the world. We're talking about VU which is a 1 trillion with a with a T dollar ETF. So we're these are big moves. What we're seeing is that there are more vehicles involved into the trade. Uh we're talking about VU and IVV but there is a state street product that we're seeing similar flows that pretty much emerged in the past 3 to 6 months or so.

So there are more and more products that are part of this and a lot of those firms are making changes. uh for example, State Street changed its dividend date and one of the reasons they do that uh is they said to make switching between their own funds easier. Uh so obviously there is the tax benefit for the people doing the trade but those big organizations are getting massive flows coming in and sometimes out uh around this and we saw state street we also see a similar treasury ETF as golf from black rockck that is seeing so it's a small ecosystem of products that are shaping around those products

yeah denita knows a thing or two about ETFs guys so if you want more ETFs just follow Danita Zach when I when I read this story and I think about your own reporting history. I I think back to your Pulit surprise 2015. You wrote about inversions and US companies dodging taxes. Right now you're writing about foreign investors dodging US taxes. Are there any similarities or is there a through line here?

Uh wow that's a great question. I I don't really know. I mean one one important difference is that uh the government was very unhappy with the uh corporate um tax avoidance that we wrote about a long time ago uh in where companies would renounce their US citizenship as it were to avoid to avoid paying US taxes. Here um the government has kind of said this one's okay. Um it's it's basically just you're allowed to buy and sell stock whenever you want to.

And here um the the the foreign investors are simply selling one stock and then buying another and going back. So unlike previous versions of this dividend avoidance that involved uh kind of a product that a bank would sell that involved a swap or something, those were attacked by the IRS and Treasury. Here um it looks like the government is is uh doesn't see this as an abuse. Do we do then the question for either of you do we do we know how much over the last few years has been avoided in taxes by this happening?

Yeah. So the um compared to the size of all the trading it's actually quite tiny. We calculated maybe 147 million just in last in the last um in 2025. That's but in order to achieve that, you had to move $40 billion in and out of these uh these um these uh ETFs four different times just to achieve that that relatively modest tax savings.

How did this get on your radar in the first place? That's my question. So, a couple years, a couple months ago, uh, uh, Denisa and I and another colleague were kind of looking at these flows. Um, and we're just kind of mystified by why they were so large because you can see if you just look at how much is is in IVV, um, it just goes up and down a lot and it's very much like clockwork every quarter. And, uh, so we just started asking around and, uh, people gave us the answer eventually.

You know what's fascinating that if you ask anyone in the ETF industry, they say we've seen the flows. They don't necessarily know what it is, but when when you look at the X dividend day, X dividend date and we see this flow, it says, oh, it all makes sense. Um, so definitely it's been growing bigger and bigger. We wrote about some of the institutional players uh who are taking part of it and we have some reporting uh that people familiar see that Marshall waste which is obviously a massive British hedge fund uh is one of the players involved into this trade and more generally one of the trades we're looking at is the cash and carry trade which is a very popular institutional trade as funds have been rising and a lot of pension funds endowments are really interested in the trade.

So obviously we uh mentioned just a few names in the stories but um here we have more of a kind of an institutional profile of the people that are doing those trades.

So I guess the question you know if it's not so much money that the government is losing as a result of this uh if it's a totally legal loophole that these companies are are are finding I'll put on my you know what my editor used to say to me all the time. Why should we care?

Yeah. So, I mean, I think part of what's interesting is just the the the massive nature of these transactions. Um, you know, some 40 or 50 billion dollars every quarter is kind of moving in and out. In fact,

I think a if I'm not wrong here, Denise, a couple quarters ago or maybe last quarter, there was a it actually caused

um you can tell the rest of the story.

Yeah. because because obviously like those are the big S&P 500 funds and there is a constant competition of like who's the biggest. So there was a little competition between Black Rockck and Vanguard in terms of the biggest uh and those flows were so big and they're so predictable that they kind of ruined the the table of who's first and who's second because we're talking about billions moving all the time. So even for those companies it's kind of changing the leadership board.

But on whether how important is that? It's very interesting cuz uh we attended the meeting with Treasury officials that flagged a couple tax aare trades and there is a similar trade that's packaged inside of a ETF that they do care about and they're worried about. There are a few different