Don’t Ask Chuck for 2013 ETF Cap Gains

December 16th at 11:31am by Tom Lydon

Charles Schwab (NYSE: SCHW) announced Monday that there will be no 2013 capital gains distributions for any of its 21 exchange traded funds.

“We’re very pleased to be maintaining our track record of tax efficiency across all Schwab ETFs, having never distributed capital gains since we launched our first ETFs in 2009,” said John Sturiale, vice president of product management for Charles Schwab, in a statement “Every penny counts when evaluating a fund’s total costs, and tax efficiency is a critical component for investors, along with low operating expense ratios, narrow bid-ask spreads, and commission-free online trading in your Schwab account.”

Most ETFs do not distribute capital gains to investors, which contributes the superior tax efficiency of the asset class over mutual funds. When mutual fund managers close a profitable trade, the tax liability is absorbed by investors, not the fund sponsor.

Last week, Invesco’s (NYSE: IVZ) PowerShares unit, the fourth-largest U.S. ETF issuer, said that it expects to deliver zero long-term capital gains distributions across 108 of 115 equity and fixed-income ETFs for 2013. [PowerShares Expects Cap Gains on Just a Few ETFs]

Schwab ETFs, including the six new Schwab Fundamental Index ETFs rolled out in August, had $16.1 billion in assets as of November 29, 2013, up from $8.2 billion at the end of November 2012, according to the statement.

Popular Schwab ETFs include the Schwab US Dividend Equity ETF (NYSEArca: SCHD), Schwab U.S. Small-Cap ETF (NYSEArca: SCHA) and the Schwab U.S. Large-Cap Value ETF (NYSEArca: SCHV). [High Quality, Low Fees With This Dividend ETF]

Schwab US Dividend Equity ETF

ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of SCHA and SCHD.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.