The idea of a universal AI assistant across the desktop is cool. Like the emphasis on local processing and provider choice.
I have tried out V1 and while it's a bit barebones, the planned features like 'Autocontext' and 'Local-RAG' sound promising. Devil's in the implementation details though.
We believe that in most ETFs right now the transaction costs are largely factored into either the expense ratio or the ETF bid-ask spread, exactly due to the redemption mechanism you discussed. See section titled Spread of the Underlying Securities in an ETF Basket in the following PDF and the following quote:
"If a market maker has to obtain a portion of the ETF constituents on the secondary market to then deliver into the fund as part of the basket process, the cost of acquiring those names should be reflected in the ETFs bid/ask spread — as costs are traditionally passed through to the end customer."
Also we take estimated spread costs into account when running our portfolio optimization. A higher bid-ask spread as measured by past 1 month NBBO p50 spread generally gets penalized in our portfolio optimization all else being equal, although this depends slightly on what optimization setting you've chosen on Double.
Except, in practice (not "traditionally"), the cost of a sophisticated market maker to acquire these constituents is usually much less than if you or I were to trade on the market in our brokerage account. SPY's spread is only 2 pennies wide (3 bps), for example.
You are correct the in-kind creation/redemption pushes any taxable gains/losses to the trading of the ETF by the holder, not the ETF itself.
But there are some benefits to doing what you refer to as a "custom one-off fund". Namely we can Tax Loss Harvest any losses and realize those to offset gains we realize in the name of rebalancing. The industry generally calls this direct indexing and wealth clients with $1M and above portfolios have been doing it for years.
We also provide the option of entering a "Buy & Hold" optimization for strategies, which would not rebalance your winners into losers and realizing any gains or losses, but your portfolio will drift over time if you choose this.
Other than fees, we are also quite a bit more customizable than most other options you mentioned. We let you do things like rebalance between positions and pick your optimization type, and backtest a screened portfolio. More customizable than most robo-advisors out there and more powerful than brokerages like M1.
We choose to lead with the expense ratio savings in this marketing push, but I really think the platform allows for the best investment account out there with tax loss harvesting built in, dollar cost averaging between positions and stock or sector customization.
We don't currently offer Roth IRA or 401K accounts, but once we do then yes it would be possible to transfer the account without changing the tax-advantaged status.
We optimize (look at the account) daily but only trade if the portfolio meaningfully improves.
We take into account tax rates while optimizing your account. You can also chose to put your strategy in Buy & Hold which will never sell anything thus never realize any cap gains.
