Tax Loss Harvesting is a great tool for generating tax alpha and lowering your annual tax bill, but it only works if you can find a suitable partner when the time comes to dump your loser(s).
I sold it and went to VBR (Vanguard Small Cap Value ETF)-which is my default holding. I had been out of it for the last few months due to a prior TLH session in 2019.
Originally, when people were tax loss harvesting, they sold a fund at a loss. Then sat on the sidelines for the 31 days to pass to avoid the wash sale rule.
In order to avoid the “substantially identical” rule of the IRS, it is best to TLH between funds that track different indexes. So, you do not get the exact same exposure.
Even within the same or closely correlated benchmarks, different funds have different tracking errors. Some of them do a better job of tracking their benchmarks than others do.
They may differ in tax efficiency. The difference should not be much since they are all passively managed index funds and belong to the same asset class, but it’s there.