Bond ETFs Don’t Keep the Taxman Away
Despite their structural tax advantages, bond ETFs can still expose investors to significant tax liabilities.
This article is part of Morningstar's Guide to Passive Investing special report.
While equity exchange-traded funds have a clear edge over actively managed stock funds on tax efficiency, the picture is slightly different for fixed-income funds. Here, I'll discuss some of the important issues investors should keep in mind when assessing the tax efficiency of fixed-income ETFs.
Phillip Yoo does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.