Van Eck's Market Vectors unit, the fifth-largest U.S. ETF sponsor, announced that just five of its 50 ETFs will make long-term capital gains distributions to investors this year.
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.
Four of the Market Vectors funds making long-term capital gains distributions will do so to the tune of less than a penny per share. Those funds are the Market Vectors CEF Municipal Income ETF (XMPT), the Market Vectors Intermediate Municipal Index ETF (ITM), the Market Vectors Short Municipal Index ETF (SMB) and the Market Vectors Mortgage REIT ETF (MORT).
The Market Vectors LatAm Aggregate Bond ETF (BONO) will make a distribution of 2.8 cents per share, according to a statement on Van Eck's Web site. The firm said the estimates were made on October 31 and are subject to change.
Last week, BlackRock's iShares unit, the world's largest ETF sponsor, said said 275 of its 280 ETFs, or 98 percent of its lineup, will not pay capital gains distributions to investors this year.
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