PowerShares Tax Center
Taxes can erode even the best fund's returns. Generally, when an investment does not require investors to pay taxes during the period of ownership, the investment is potentially more tax efficient. Because of their unique in-kind structure, ETFs may serve as a tax-efficient investment tool for shareholders who wish to defer capital gains until the point of sale.
A number of mutual fund firms have already issued 2014 capital gains distribution estimates with some extending well into double digits as a % of NAV. With the potential for record high mutual fund capital gains distributions this year, managing client tax exposure is more important than ever for Financial Advisors. For F.A.s considering a move toward ETFs, this year will likely highlight one of the ETF structure's strongest attributes - tax efficiency. As a reminder, it is always prudent for an FA to educate their clients on the differences between mutual funds and ETFs, included but not limited to: active vs passive management and fee structures.
Investments with similar objectives often display closely correlated performance and may provide an opportunity to harvest tax losses without sacrificing the desired exposure. To find a PowerShares ETF that is closely correlated with a particular security or fund, simply enter the ticker symbol into the PowerShares Correlation Analyzer Tool. The tool will produce a list of PowerShares ETFs that are most closely correlated with the security entered.
In some instances, an ETF may be an appropriate replacement for an individual stock. Replacing a stock with an ETF may provide an investor with a similar, less- concentrated exposure to the market attributes exhibited by the individual stock. To find a PowerShares ETF that contains a specific stock, simply enter its ticker symbol into the PowerShares Stock Screener Tool. The tool will provide a list of PowerShares ETFs that contain that stock along with its weight in the portfolio.
Choosing an investment which covers a similar market segment to a current position may provide an opportunity to harvest tax losses without sacrificing the desired exposure. To find a PowerShares ETF that covers a particular market segment, use the PowerShares Exposure Comparison Tool. The tool will produce a list of PowerShares ETFs that have the highest percent allocation to the country, style, sector, industry or sub-industry that is selected.
1099 Data for PowerShares Products
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DB Commodity and Currency Fund Investors
|Tax Package Support Contact Information |
American Jobs Creation Act
|Qualified Interest Income (QII) |
Tax Loss Harvesting
|Tax-Loss Harvesting with PowerShares ETFs |
|PowerShares DB Information on Tax Reporting |
|ETF Tax Characteristics for Shareholders White paper |
There are risks involved with investing in ETFs including possible loss of money. Index–based ETFs are not actively managed. Actively managed ETFs do not necessarily seek to replicate the performance of a specified index. Both index–based and actively managed ETFs are subject to risk similar to stocks, including those related to short selling and margin maintenance. Ordinary brokerage commissions apply.
While it is not Invesco PowerShares intention, there is no guarantee that the Funds will not distribute capital gains to its shareholders.
Invesco PowerShares and Invesco Distributors, Inc. and their affiliates do not provide tax advice. Please note that (i) any discussion of U.S. tax matters contained is this communication cannot be used for the purpose of avoiding tax penalties; (ii) this communication was written to support this promotion or marketing of matters addressed herein; and (iii) you should seek advice based on your particular circumstances from an independent tax advisor.
The information in this communication is not a complete analysis of every material aspect relating to tax harvesting. This communication is for educational purposes only. Tax consequences will vary between individuals and each individual should carefully evaluate his or her tax position with an independent advisor.
The PowerShares DB Funds are not a mutual funds or any other type of Investment Company within the meaning of the Investment Company Act of 1940, as amended, and are not subject to regulation thereunder. Shares in the PowerShares DB Funds are not FDIC insured, may lose value and have no bank guarantee.