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ETF Specialist

3 Factors Driving ETF Capital Gains Tax Bills

The strengthening dollar in 2016 means that currency hedging is once again the tax villain for ETF investors.

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Welcome to December, the time of year when investors cozy up next to the fireplace with hot cocoa to reflect on the year, resolve to better themselves, and evaluate the tax consequences of their investment decisions.

Investors in exchange-traded funds can be thankful that these funds' structure is, generally speaking, more tax-efficient than traditional open-end mutual funds. As Morningstar ETFInvestor editor Ben Johnson discussed in "Declare the Pennies on Your Eyes" in the November 2015 issue, ETFs' inherent tax efficiency has two primary sources: 1) strategy and 2) structure.

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