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

EXPLORE THESE IDEAS

  • 45%* of mutual funds paid capital gain distributions
  • 4%* of ETFs paid capital gain distributions
  • 0%* of Capital Group active ETFs paid capital gain distributions

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

Get our comprehensive brochure

DOWNLOAD NOW

GET SUPPORT

We're here to help.

Partner with an experienced team to identify opportunities

Our portfolio construction team can analyze your portfolios to:

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.

 

Recommend strategies and vehicles that can best help pursue your clients’ goals.

Request a personalized portfolio analysis today

Get the latest on CG ETFs

Sign up to:

  • Learn more about the latest developments
  • Receive thought leadership and insights
  • Be among the first to hear about new products

 

This content is intended for financial professionals only and is subject to your home office restrictions.

To find your CRD# go to adviserinfo.sec.gov.
*REQUIRED FIELDS

ADDITIONAL RESOURCES

Want to improve portfolio tax efficiency?

Get our guide to learn how ETFs may help

DOWNLOAD NOW arrow_forward

ETF tax efficiency, explained

Hint: the ETF’s structure makes it possible

LEARN HOW arrow_forward

Active ETFs can be as tax efficient as passive

It’s not true that only passive ETFs offer tax advantages

LEARN MORE arrow_forward

ETFs for the core (& more)

Learn about our multi-asset, equity and fixed income ETFs

EXPLORE OUR ETFs arrow_forward

*Source: Morningstar. Data as of December 31, 2022, the latest available data regarding annual capital gains distributions as of September 2023.

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.

Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.
Capital Group exchange-traded funds (ETFs) are actively managed and do not seek to replicate a specific index. ETF shares are bought and sold through an exchange at the then current market price, not net asset value (NAV), and are not individually redeemed from the fund. Shares may trade at a premium or discount to their NAV when traded on an exchange. Brokerage commissions will reduce returns. There can be no guarantee that an active market for ETFs will develop or be maintained, or that the ETF's listing will continue or remain unchanged.
This material does not constitute legal or tax advice. Investors should consult with their legal or tax advisors.
Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. This information is intended to highlight issues and should not be considered advice, an endorsement or a recommendation.
All Capital Group trademarks mentioned are owned by The Capital Group Companies, Inc., an affiliated company or fund. All other company and product names mentioned are the property of their respective companies.
Use of this website is intended for U.S. residents only. Use of this website and materials is also subject to approval by your home office.
Effective July 1, 2024, American Funds Distributors, Inc. was renamed Capital Client Group, Inc.
This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice.