ETF Insights & Resources

ETF Basics

ETF Tax Efficiency
ETF Tax Efficiency

ETF TAX EFFICIENCY

Don't skip opportunities to improve portfolio tax efficiency using ETFs

How can active ETFs be used to pursue more tax efficient portfolios?

Identify tax loss harvesting1 opportunities

Construct fee-based models

Rebalance portfolios

Consider investing excess cash in ETFs

Reinvest dividends into ETFs

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The active evolution of ETFs

TAX-LOSS HARVESTING

Don't skip opportunities to tax-loss harvest with ETFs.

3 basic steps:

Step 1

Identify long-term and short-term gains and losses in the portfolio.

Step 2

Mind the wash sale rule2 so the capital losses are recognized for tax purposes.

Step 3

Consider replacing investments with ETFs to potentially improve the tax efficiency of the portfolio.

OUR GO-TO GUIDE

Using ETFs to pursue greater tax efficiency

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Identify funds that have the potential to realize the greatest losses for tax purposes.

 

Learn which funds may distribute capital gains and leave your investors with an unexpected tax bill.

 

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ETF tax efficiency, explained

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1 Tax-loss harvesting involves selling an investment that has lost value (from the price the investor originally paid for it) to create a capital loss that can be used to offset capital gains on another investment, either now or in the future.

2 The Internal Revenue Service’s wash-sale rule regulates the timing around how quickly a substantially identical security can be purchased after the underperforming asset was sold to realize a tax benefit from tax-loss harvesting.

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