BlackRock's (BLK) iShares unit, the world's largest ETF sponsor, said 275 of its 280 ETFs will not pay capital gains distributions to investors. That works out to 98 percent of the firm's total ETF product lineup.
Distributions are paid to investors from the capital gains of the firm's investment portfolio. For example, when a mutual fund manager turns a profit on a trade and closes the position, the fund's shareholders, not the sponsor, are saddled with the tax liability.
Most ETFs do not distribute capital gains to investors, which makes the asset class typically more tax efficient than mutual funds.
The five iShares ETFs that will distribute capital gains this year are the iShares Barclays GNMA Bond Fund (GNMA), the iShares Financials Sector Bond Fund (MONY), the iShares Core Total U.S. Bond Market ETF (AGG), the iShares Barclays MBS Bond Fund (MBS) and the iShares iBoxx $ Investment Grade Corporate Bond Fund (LQD), according to the firm.
AGG's total distribution could be 39 cents to 49 cents per share, making it the largest of the five ETFs mentioned hear. LQD's distribution is expected to be no more than a penny per share.
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