Articles for Financial Advisors

ETF Tax Efficiency

ETF Tax Efficiency

Taxable investors may prefer ETFs over mutual funds due to a regulatory loophole that shields investors from capital gains distributions until final sale of the ETF. As shown in the table below, many popular foreign and global ETFs have not ever paid capital gains distributions (at least from their 2007-2008 inception to Dec. 2011). 

 

ETF Fees and Capital Gains Distributions

 

Benchmark

iShares

Vanguard

MSCI  ACWI Ex US

MSCI ACWI

FTSE All-World Ex US

FTSE All-World

Markets

Developed & Emerging ex. U.S.

Developed & Emerging

Developed & Emerging ex. U.S.

Developed & Emerging

Inception

3/26/2008

3/26/2008

3/2/2007

6/24/2008

Expense Ratio

0.35%

0.35%

0.22%

0.25%

Cap. Gains Distributions

0

0

0

0

 

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