M* discovers that ETFs are more tax efficient than mutual funds

[Nords]

"Are ETFs Really More Tax-Efficient Than Mutual Funds?"

M*'s startling conclusion? "In most cases ETFs are more tax efficient than conventional mutual funds in the same asset classes or categories. Nevertheless, ETFs can surprise you."

Followed by: "Disclosure: Barclays Global Investors (BGI), which is owned by Barclays, currently licenses Morningstar's 16 style-based indexes for use in BGI's iShares exchange-traded funds. iShares are not sponsored, issued, or sold by Morningstar. Morningstar does not make any representation regarding the advisability of investing in iShares that are based on Morningstar indexes."

 

[LOL!]

C'mon nords, you somewhat misrepresent what Mr Culloton wrote.   Suppose I pull a couple of quotes from the article:

For instance, Vanguard 500 Index's VFINX tax-cost ratios for the trailing one-, three-, and five-year periods ended Jan. 31, 2006, are lower than those of both of its ETF rivals: SPDR SPY and iShares S&P 500 Index IVV.

and

Similarly, at the end of January, the five-year tax-cost ratios and tax-adjusted returns of traditional index funds such as the Schwab 1000 Index SNXFX and the TIAA-CREF Equity Index TCEIX were better than those of their ETF counterparts--iShares Russell 1000 Index IWB and iShares Russell 3000 Index IWV, respectively.

Anyways, Mr Culloton did not have any startling conclusions.

 

[cute fuzzy bunny]

Hmmm...those were noted exceptions in the article.

A broader couple of quotes perhaps?

"Overall, the answer is yes. ETFs have been much more tax-efficient, as measured by Morningstar's tax-cost ratio, than the typical conventional mutual fund."

"These examples, however, may be exceptions that prove the rule: In most cases ETFs are more tax efficient than conventional mutual funds in the same asset classes or categories."

Sounds like a conclusion...how startling is up to the reader I guess.

 

[Nords]

OK, OK, I'm not trying to flog an agenda, it just seemed that M* was asking pretty ingenuous questions and then answering them with a lot of caveats. Almost as if they had to keep someone's ETF marketing staff happy.

You know, deadline journalism.

 

[cute fuzzy bunny]

Oh the guy wrote the article, and then the politically savvy editor marked it up for him