Here's one thing iShares exchange-traded fund holders won't have to worry about this holiday season: capital gains distributions.
Barclays Global Investors
, the mega-bank behind the iShares brand of ETFs, recently announced there will be no year-end capital gains distributions for any of its domestic equity, international equity and domestic fixed-income exchange-traded funds. This is the fourth consecutive year in which iShares investors won't have to fret about capital gains distributions.
"Taxes can adversely impact fund performance and few fund families can offer over 100 funds covering nearly every asset class, style and sector, along with tax efficiency due to the fund's low portfolio turnover and unique ETF structure," says Lee Kranefuss, CEO of BGI's ETF Business.
Capital gains distributions typically occur near the end of the calendar year and are taxable to mutual fund shareholders. This often creates a problem for investors who purchase new mutual funds near the end of a calendar year, because the distribution is treated as taxable income on shares they haven't held very long. To add further insult to new shareholders, the mutual fund's net asset value is reduced after the distribution.
ETFs are index funds that are bought and sold like common stocks on securities exchanges. ETFs are attractive to many individual and institutional investors because of their tax and trading efficiency.
Assets in the U.S. ETF industry totaled $288.8 billion at the end of November after experiencing a monthly net inflow of $14.6 billion. This is the largest one-month inflow total since the introduction of the first exchange-traded fund, the
SPDR 500 Trust
, in 1993.
As of November, BGI is the largest U.S. ETF provider, with $163.6 billion in across 101 funds, followed by
State Street Global Advisors
which oversees $80.3 billion in assets in 31 funds. Index fund giant
has $10.6 billion in its 23 funds, while ETF upstart
watches over $2.7 billion across its 31 funds.
The top iShares inflows year-to-date through November are the
MSCI EAFE Index
, with $6.54 billion;
MSCI Emerging Markets Index
, $4.01 billion;
, $3.79 billion; and the
Dow Jones Select Dividend
, with $2.21 billion.
State Street Global Advisors confirmed that it will pay out capital gains on three of its ETFs, the
streetTRACKS DJ Wilshire Small Cap Value
streetTRACKS DJ Wilshire REIT