“Overall, just 5% of the 299 iShares ETFs are expected to pay a capital gain, while 13% of Vanguard’s 67 ETFs are likely to do so,” according to S&P Capital IQ.
Other major ETF issuers are equally adept at helping investors avoid capital gains distributions. For example, just 4.5% of PowerShares’ assets under management have distributed capital gains since inception, according to a note on the company’s blog. PowerShares, a unit of Invesco (NYSE: IVZ), is the fourth-largest U.S. ETF issuer by assets and home to one of the largest lineups of ETFs.
PowerShares scant percentage of capital gains distributions is all the more impressive when considering the firm sponsors one of the oldest and largest lineups of fundamentally-weighted and smart beta ETFs, indicating that although some of those funds may have higher turnover ratios than cap-weighted ETFs, PowerShares is able to use the ETF structure and in-kind redemptions to the benefit of its investors.
Vanguard Intermediate-Term Bond ETF