Q: HI;
Today you had a question from Tim concerning the banks, and their outlook. I would like to buy some BMO; ZEB, however in the fund facts they state that they distribute any realized capital gains in December.
I do not want to get a tax slip for the yearly gains. Is my thinking off course? What do you suggest? , besides buying 6 stocks. If i wait till January , the price may have appreciated a lot.
Thanks, BEN.
Today you had a question from Tim concerning the banks, and their outlook. I would like to buy some BMO; ZEB, however in the fund facts they state that they distribute any realized capital gains in December.
I do not want to get a tax slip for the yearly gains. Is my thinking off course? What do you suggest? , besides buying 6 stocks. If i wait till January , the price may have appreciated a lot.
Thanks, BEN.
5i Research Answer:
The thinking is correct; some ETFs do have year end distributions. We do not like letting taxes drive long term investment moves, but depending on the fund it can be an advantage to wait. But, as noted in the question, there is a capital risk also if a big sector move is missed while waiting. We can't guarantee anything BUT...ZEB did not pay out a year end distribution in at least the last eight years. So with this history, and also, with the banking sector hardly being a stellar performer in 2023, we would consider the odds of a capital gains distribution fairly low. The financial TSX sector is down 1% YTD as of today.