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Message
re: Vanguard IRA Question
Posted on 7/15/15 at 7:56 am to Volvagia
Posted on 7/15/15 at 7:56 am to Volvagia
quote:
Please elaborate on how the ETF has better tax consequences than the related mutual fund.
Are there any tax advantages to owning a Vanguard ETF®?
Because Vanguard ETFs are shares of conventional Vanguard index funds, they can take full advantage of the tax-management strategies available to both conventional funds and ETFs.
Conventional index funds can offset taxable gains by selling securities that have declined in value at a loss. In addition, they tend to trade less frequently than actively managed funds, which means less taxable income gets passed on to shareholders. Vanguard ETFs can also use in-kind redemptions to remove stocks that have greatly increased in value (which trigger large capital gains) from their holdings.
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