Dodging Dividend Taxes Just Got a Little Easier This Week
Issuers are increasingly launching equity and fixed-income ETFs designed to maximize after-tax returns
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Photographer: Michael Nagle/BloombergWelcome to ETF IQ, a weekly newsletter dedicated to the $14 trillion global ETF industry. I'm Bloomberg News reporter and anchor Katie Greifeld.
A cynic might say that the whole point of ETFs is to minimize tax bills. That’s not the entire picture — intraday liquidity, transparency, lower fees! — but it’s a big part of the wrapper’s appeal. ETFs are famed for deflecting capital-gains taxes in most cases. The in-kind redemption mechanism means that ETF investors can choose when to take a capital gains tax hit (namely, when they decide to sell, versus when other investors in the fund do).