Taxation of an ETF Trade
January 27th, 2012
One of the perceived benefits of trading ETFs is that they are more tax efficient than mutual funds. Though this is generally true for traditional ETFs, it is not necessarily the case for actively managed ETFs. In a passively managed ETF, the investor pays his or her taxes when the entire investment is sold. In an actively managed account, the fund trades more often and with each ETF trade, it accrues taxes.
