Thoughts on mETFs-- what about cap gain distributions and divs?

There are a number of ETFs that have been whitelisted. The forum is full of people suggesting various ETFs. I initially put these thoughts in a post that was taking the temperature of the group in regards to adding a real estate ETF. However, I think it would be useful to get insight from the forum at large. I see two issues that could make it very difficult for the mETF to accurately track the actual ETF with little to no variance. The first is dividends, since no divs are paid out to mETF holders it should trade at a discount to actual. I think this is one that many are familiar with and I have seen decent amount of discussion on. The second, I have seen very little discussion. mETF holders will miss out on the capital gain distributions (or return of capital in more rare situations). Most of these ETFs follow indexes. Usually, annually, the pms are forced to sell/turn over their portfolios when MSCI or Russell or S&P decides to add/delete companies from the index. These gains are then distributed to the shareholders, pro rata. I think before mETFs really take off there has got to be a mechanism to account for those events.

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Happy you made this post. In a discussion on reddit, a user pointed out that the reward mechanisms here are much more about short-term positions rather than hodling (consider a 1.5% exit fee rather than getting charged a recurring management fee). Iā€™m not sure how many Mirror users want to hold these synthetics, which is when dividend mechanisms are more important.

On the other hand, if the community generally wants to hold mAssets instead of sliding in/out of positions, we should definitely look at a solution.

I think that is a good point. At least in the current state, my guess is those taking positions are probably doing so for the rewards. Not so much bc they truly are looking to mAssets as a way to invest in the underlying asset. In which case, it is a moot point. But I do think it is an interesting thought exercise if eventually the that is where Mirror wants to head.