Tax benefits of ETFs overrated.(Short Interests)

Investment News, January, 2006

Byline: David Hoffman NEW YORK - The supposed tax efficiency behind exchange traded funds has been one of their biggest selling points, but over the past five years, ETFs have been no more tax efficient than the average mutual fund, according to a study released last month by Lipper Inc.

of New York. The reason, however, has more to do with the market downturn that began in 2000 than with ETFs themselves. As a result of the downturn, mutual funds were able to offset taxable gains with stockpiled losses incurred from 2000 to 2002, according to Lipper. But after two years of above-average returns and with 2005 appearing as if it will end with at least a moderate return for equity funds, most of those losses have disappeared, the study said....

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