A new exchange-traded fund (ETF) set to launch this week is drawing attention not for what it includes, but for what it avoids—taxable dividends.

Roundhill Investments is debuting the S&P 500 No Dividend Target ETF (ticker: XDIV) on Jul. 10.

According to Bloomberg Tax, its goal is to track the index while deliberately sidestepping dividend payouts, which will reduce ordinary income for investors. 

The strategy is simple in execution. The fund exits positions just before their ex-dividend dates and rotates into similar S&P 500 ETFs that aren’t about to distribute income. That timing allows it to avoid triggering taxable dividends, which can be particularly attractive to high earners and institutions seeking to limit annual income exposure in brokerage accounts. 

While most ETFs already use in-kind redemptions to avoid capital gains taxes, XDIV’s focus on ordinary income sets it apart. “There hasn’t been a product in the market to meet the needs of investors for this,” Roundhill CEO Dave Mazza told Bloomberg. 

The idea taps into a broader trend: tax-aware investing is no longer limited to private clients. Other recent examples include the Burney U.S. Factor Rotation ETF and Cambria’s Tax Aware ETF, which use different techniques to minimize taxable events.