Invest
Why ETFs are ‘more tax efficient’ than other funds
Recent years have seen investors increasingly move into exchange-traded funds (ETFs) for a host of reasons, according to State Street Global Advisors, with one major advantage being the different way ETF tax is computed.
Why ETFs are ‘more tax efficient’ than other funds
Recent years have seen investors increasingly move into exchange-traded funds (ETFs) for a host of reasons, according to State Street Global Advisors, with one major advantage being the different way ETF tax is computed.
Thomas Reif, one of State Street Global Advisors portfolio managers, says investors stand to benefit from being aware of the ways in which their investments are taxed.
Mr Reif said ETFs are a “more tax efficient vehicle” than other traditional managed funds because an ETF unit-holder pays their own tax.
“That might sound like a bit of a surprise. Surely you pay your own tax on all investment schemes? Well, that’s not the case,” he said.
In traditional managed funds, the capital gains tax that needs to be paid when another investor chooses to redeem their units is paid for from the shared pool of capital invested in the fund, meaning those who do not redeem their units will indirectly pay taxes for those who do.
“If you buy an ETF at a certain price, let’s call it a dollar, and you sell it subsequently for $1.10, you pay tax on the ten cents of capital gains,” Mr Reif said.
“In mutual funds, or a traditional investment scheme, you may pay tax, but it depends on what other capital gains are earned by other investors.”
Additionally, ETFs that invest in Australian will benefit from the franking credits of their underlying shares, further adding to their tax advantages, Mr Reif said.
Mutual funds
Micro-investing: Is it worth it?
Investing can be complex. It involves making financial decisions on how your money is going to be invested and managed over time, as well as figuring out the right strategy for each investment. There...Read more
Mutual funds
RAIZ v Spaceship: Which is better value?
Raiz and Spaceship have become the two biggest apps in the micro-investing space, but which offers a better deal for Aussie investors looking for a hands-off savings strategy? ...Read more
Mutual funds
Sold your stocks during the dip last year? Here’s how much it might have cost you
If you cashed out during last year’s COVID-19 crash, here’s how much it might have cost you. ...Read more
Mutual funds
‘True to label’ warning again given to fund managers: ASIC
Consumers should be wary: Fund managers aren’t doing enough to ensure products are “true to label”, with a number of product names not aligning with underlying assets in those funds. ...Read more
Mutual funds
Move over, mainstream: ESG excels
Responsible investing is proving its worth in the investment game, beating out the total return of the S&P/ASX 300 over the last decade. ...Read more
Mutual funds
ASIC makes frozen funds easier to access
A new relief measure will enable investors suffering hardship to access their investment money even where managed funds have been “frozen” to maintain fund stability through the COVID-19 pandemic....Read more
Mutual funds
Is it time to put a food-style label on investment products?
Much like the food people eat, investors are being told they need to know what they are buying before purchasing exchange-traded products, as many are unaware of the ramifications if they don’t. ...Read more
Mutual funds
Why you should think about ESG investing this World Environment Day
Today marks World Environment Day, with experts using the occasion to flag how Aussies can benefit by investing in a way that helps the planet. ...Read more
Wrapping up an eventful 2021
Listen now
What Omicron means for property, and are units right for first-time buyers? What is equity crowdfunding? Are industry super funds tapping into member funds to save their skins?
Listen now
Will housing affordability improve in 2022? Will buy now, pay later become the norm? Why are Aussies staying in failing super products?
Listen now
Who really benefits from crypto ETFs? How will the RBA respond to rising inflation? Could a mandate help address unpaid super?
Listen now
Mutual funds
Micro-investing: Is it worth it?
Investing can be complex. It involves making financial decisions on how your money is going to be invested and managed over time, as well as figuring out the right strategy for each investment. There...Read more
Mutual funds
RAIZ v Spaceship: Which is better value?
Raiz and Spaceship have become the two biggest apps in the micro-investing space, but which offers a better deal for Aussie investors looking for a hands-off savings strategy? ...Read more
Mutual funds
Sold your stocks during the dip last year? Here’s how much it might have cost you
If you cashed out during last year’s COVID-19 crash, here’s how much it might have cost you. ...Read more
Mutual funds
‘True to label’ warning again given to fund managers: ASIC
Consumers should be wary: Fund managers aren’t doing enough to ensure products are “true to label”, with a number of product names not aligning with underlying assets in those funds. ...Read more
Mutual funds
Move over, mainstream: ESG excels
Responsible investing is proving its worth in the investment game, beating out the total return of the S&P/ASX 300 over the last decade. ...Read more
Mutual funds
ASIC makes frozen funds easier to access
A new relief measure will enable investors suffering hardship to access their investment money even where managed funds have been “frozen” to maintain fund stability through the COVID-19 pandemic....Read more
Mutual funds
Is it time to put a food-style label on investment products?
Much like the food people eat, investors are being told they need to know what they are buying before purchasing exchange-traded products, as many are unaware of the ramifications if they don’t. ...Read more
Mutual funds
Why you should think about ESG investing this World Environment Day
Today marks World Environment Day, with experts using the occasion to flag how Aussies can benefit by investing in a way that helps the planet. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
