Exchange-traded Fund (ETF) Tax Efficiency

Disclaimer: This article explains some potential options related to investing but does not constitute investment advice. Please get in touch if you would like to discuss your particular situation.

Note: Please see my video  discussion of this topic below or other videos on my videos page. You may also want to read my PDF guide entitled Sensible Strategies to Reduce Your Taxes or other articles regarding retirement accounts on my Research page

 

Some people attribute their tax efficiency to the low-turnover nature of the indices underlying many ETFs. Low turnover is a factor but there is another critical driver of ETF tax efficiency: their in-kind creation and redemption process. If are interested in this topic, here is a link to an article on this topic: WHY ETFS ARE MORE TAX-EFFICIENT THAN MUTUAL FUNDS.

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