When it comes time to sell investments, there is often a choice of which investments to sell in a particular asset class. However, the tax consequences can be very different. Our investment process delays trades for more favorable tax treatment, seeks qualified tax treatment on dividends, and reduces overall tax burden where possible. We aim to minimize the impact of taxes by keeping track of every trade.
Different investment products have different tax implications. Taxable capital gains are created when investments are sold for a profit. One way to minimize those taxes is to invest in ETFs which typically engage in less trading activity than actively managed portfolios. Less trading activity means fewer incidents to realize capital gains. Also, ETFs are structurally more tax-efficient than comparable mutual funds. We always strive to find and select investment options that minimize taxes for our members.