In any market environment, an important benefit to the ETF structure is tax efficiency. ETFs can provide two main sources of tax efficiency that help minimize potential capital gains for individual investors.
Pursue tax efficiency with active ETFs
Consider these ideas:
- Identify tax-loss harvesting1 opportunities
- Construct fee-based models
- Rebalance portfolios
- Invest excess cash in ETFs
- Reinvest dividends in ETFs
FREQUENTLY-ASKED QUESTION
Why all the buzz around tax efficiency for ETFs?
Capital Group ETF specialist Megan France shares her perspective.
EDUCATION
ETF resources to grow your toolkit
The basics and more
Basics of tax efficiency
How to tax-loss harvest
Three ways to implement
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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.
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 ETF 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.
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