Issue link: https://resources.envestnet.com/i/1527502
FOR HOME OFFICE AND ADVISOR USE ONLY – NOT FOR USE WITH THE INVESTING PUBLIC. © 2024 Envestnet | PMC. All rights reserved. We decided to combine the average reduction in tax drags and fees offered by active ETFs when compared with active mutual funds. This unified analysis helps illuminate the comprehensive savings that may be received by using active ETFs instead of mutual funds. While the range of tax and cost reductions varies across asset classes, the results are clear: Performance drags can potentially be lowered by using ETFs, especially in taxable accounts. Wrapping Up In summary, active ETFs can provide meaningful tax and fee savings for investors, but it's important to remember that expenses and tax efficiency vary widely across the product universe. ETFs and mutual funds exhibit significant cost differences, even among products that seem very similar. It's worth noting, however, that ETFs don't have the multiple share classes, sales loads, and breakpoints that complicate mutual fund cost analysis. Comparing the tax efficiency of various funds can be quite challenging, though, so we welcome your outreach if you're an advisor who'd like research assistance or information on ETF portfolios. We're always happy to help, and, speaking of ETF portfolios, they will be the topic of our next article in this series! We look forward to sharing more ETF research with you soon. Disclosure The information, analysis, and opinions expressed herein are for informational purposes only and represent the views of the speakers, not necessarily the views of Envestnet. The views expressed herein reflect the judgement of the writer and are subject to change at any time without notice. Information obtained from third party resources are believed to be reliable but not guaranteed. Any graphical information contained herein is for illustrative purposes only and not based on actual client data. Exchange Traded Funds (ETFs) and mutual funds are subject to risks similar to those of stocks, such as market risk. Investing in ETFs may bear indirect fees and expenses charged by ETFs in addition to its direct fees and expenses, as well as indirectly bearing the principal risks of those ETFs. Income (bond) ETFs and mutual funds are subject to interest rate risk which is the risk that debt securities in a fund´s portfolio will decline in value because of increases in market interest rates. Expense Ratios reflect the internal expenses of any investment products but do not reflect the deduction of investment advisory fees. Performance results will be reduced by fees including, but not limited to, investment management fees and other costs such as custodial, reporting, evaluation and advisory services. A description of all fees, costs and expenses are found in a financial advisor's Disclosure Brochure. Past performance is not indicative of future results. Neither Envestnet, Envestnet | PMC™ nor its representatives render tax, accounting or legal advice. Any tax statements contained herein are not intended or written to be used, and cannot be used, for the purpose of avoiding U.S. federal, state, or local tax penalties. Taxpayers should always seek advice based on their own particular circumstances from an independent tax advisor.