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ETF Specialist

ETFs Again Proved Their Worth to Taxable Investors in 2020

Most avoided capital gains distributions this year.

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Capital gains season is here, and exchange-traded fund investors once again have reason to celebrate. Most ETFs will not be making capital gains distributions in 2020.

To date, 12 of the largest ETF sponsors--which together manage 95% of the $5.2 trillion invested in ETFs--have reported estimated capital gains distributions for their funds. These 12 firms back a total of 1,392 ETFs, representing 61% of the 2,285 ETFs available to investors as of Dec. 10, 2020. Among these 1,392 ETFs, just 70 (5%) will distribute capital gains to their investors this year. The impact of these distributions on investors’ tax bills will generally be small, as 59 of the 70 (84%) of the funds spinning off gains will make distributions that amount to less than 1% of their Nov. 30 net asset values.

Ben Johnson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.