How Tax Can Impact ETF Returns

There are specific tax differences related to the ETF domicile that must be considered when selecting physically replicated ETFs

Dimitar Boyadzhiev 16 October, 2018 | 8:50AM

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Taxation of investments is a complex matter, but this shouldn't stop investors from carrying out basic due diligence when choosing an exchange traded fund (ETF) to avoid a negative impact on returns.

UK investors have access to a wide array of ETFs listed on the London Stock Exchange. But being listed in the local exchange is no guarantee of tax efficiency. Some of these ETFs are listed in London just because it is the trading venue of choice for many international investors, potentially meaning that these ETFs may have been initially designed to suit the needs of these investors rather than those of UK-based investors.

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About Author

Dimitar Boyadzhiev  is a Passive Strategies Research Analyst for Morningstar

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