The proceeds would then be used to invest in a similar ETF while the sale of the stock may be used to allocate within the overall investment portfolio.
ETFs provide greater portfolio transparency. As such, investors can make an informed decision when deciding to select an equivalent ETF to replace a recently sold position. Additionally, the investment vehicle may be traded like a stock during normal trading hours.
For more information on ETFs and taxes, visit our taxes category.
Max Chen contributed to this article.