I would have a question regarding that. I looking at a US small cap value ETF, the three that I was interested in are:
-iShares S&P Small-Cap 600 Value ETF (IJS)
-SPDR S&P 600 Small Cap Value ETF (SLYV)
-Vanguard S&P Small-Cap 600 Value ETF (VIOV)
If you look at the distribution history in the morningstar page of each funds (see link in the tickets), you can see that for the SLYV, a significant portion of the return was as a capital gain. Therefore, would this portion not be taxed here since it is not a dividend?
I cannot find your ETF on ICtax (using the ISIN US78464A3005), but since it distributed a dividend then you should declare that dividend as income and then yes, capital gains are not taxed.
It gets more complicated with accumulated funds because it’s not easy to estimate how much dividend was reinvested in the fund.
That is indeed super super interesting and might make a huge difference if you compare the post-tax performance. Adding this ETF to ICTax is actually quite easy and shouldn’t be a big problem.
Is this the only ETF that has such a high share of capital gains versus dividends? How did you find this one?
ETF can and sometimes do make distributions from capital gains. These would, to my understanding, not be taxable as income.
These seem to be rare for U.S.-domiciled index ETFs, though I’ve seen it myself with one or two ETFs I’ve held.
I presume these aren’t good indicators for future distributions policy and might be rather one-offs. It seems to be something that U.S. ETFs actively (and mostly successfully) strive to avoid for tax reasons, as the U.S. have capital gains tax.
I actually found it while looking for an US SCV fund. If you compare it with another fund tracking the same index, cou can see that since inception, SLYV had significantly higher returns (including the capital gains), which doesn’t mean that it will be the case in the future. Comparison SLYV and IJS VIOV added to the comparison
VIOV inception date is sooner, that is why there are two link.
I also read this discussion and will most likely post some question there soon.
Edit: I posted there. One of the answers I got was the following:
I have contacted SPDR recently about SLYV large cap gain distributions in the past and they stated they have implemented a new trading strategy that has fixed the past issues.
So I assume this won’t happen too much in the future. But this fund still have the smallest TER of the US SCV funds so it still look good to me.
But (given low enough or assuming zero transaction costs) you would pocket the difference tax-free, instead of paying taxes on the dividend. That would be the difference.
By reading and partipating to this forum, you confirm you have read and agree with the disclaimer presented on http://www.mustachianpost.com/
En lisant et participant à ce forum, tu confirmes avoir lu et être d'accord avec l'avis de dégagement de responsabilité présenté sur http://www.mustachianpost.com/fr/
Durch das Lesen und die Teilnahme an diesem Forum bestätigst du, dass du den auf http://www.mustachianpost.com/de/ dargestellten Haftungsausschluss gelesen hast und damit einverstanden bist.