Author Topic: Would transactions tax hurt index funds/ETFs (including leveraged & foreign)?  (Read 881 times)

swampwiz

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I typically have a part of my portfolio in funds of ETFs that are tied to an index, a lot of times a foreign benchmark and also leveraged.  I am wondering what effect the talked about transactions tax would have.  (I think with the ballooning Trump deficits, when the Democrats get back into total power in 2021, they will implement this.)

TheAnonOne

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I typically have a part of my portfolio in funds of ETFs that are tied to an index, a lot of times a foreign benchmark and also leveraged.  I am wondering what effect the talked about transactions tax would have.  (I think with the ballooning Trump deficits, when the Democrats get back into total power in 2021, they will implement this.)


Careful, your agenda is showing.

Kidding aside, your talking about 4 years from now, about an unknown election, with an unknown law, that will be hotly debated and may not pass even if your future political guesses are correct.

That being said, if it happens, the MMM crew will find the most optimal route and options. Indexing will still probably be the best one, because index funds like VTSAX do not make a lot of purchases and trades. It is incredibly tax efficient TODAY for this reason .

Scandium

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Is this the "wall st tax" Bernie talked about? That tells you how likely and well thought out it is..
That would be a massive disruption to the market, discourage market making, tax everyone saving for retirement (every 2 weeks), have lots of unforeseen consequences etc etc. I'm saying there's no way this would happen (thankfully).

ps: if it did happen, index funds with their low turnover would be the least bad option. So shouldn't affect the approach of most people here.
« Last Edit: March 05, 2018, 12:52:42 PM by Scandium »

Proud Foot

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IF it would happen I don't believe it would hurt the index funds/ETF's. The nature of their holdings and low turnover would lead to a small increase in their ER. On the other hand the active funds would see their ER's become even more outrageous. Of course this would all depend on the details. If it is assessed at the investor level (not mutual fund/etf level) it really would not have a huge effect on people here who buy and hold.