In a low return environment, every dollar counts. Now more than ever, it’s important to consider tax efficiency when building your portfolio.
Some investors are surprised to find that they have to pay taxes on capital gain and dividend distributions from their mutual funds and ETFs, even if they didn’t sell their funds during the year. In fact, over the past 10 years, the average annual tax cost for a mutual fund was 1.3%.1
Think that doesn’t mean much? Taxes can actually cost more than a mutual fund’s expense ratio and can eat into your returns over time.