Tax Strategies

I know that ETFs are generally more tax efficient than mutual funds.

So I'm seeking a tax efficient version of VSIAX, and am having difficulty.  I find the VBR ETF, but it seems no better.  I'm wondering about two things...

1) Are lots of mutual funds already more tax efficient than they used to be in the past?  Specifically, VSIAX doesn't seem to have created any capital gains for owners who didn't buy or sell during the year, short term or long term.  I confirmed a similar situation for VFIAX and FXIAX.  For years, NONE of them have generated any capital gains for folks that simply held them all year.  Meanwhile, VBR seems to be the Vanguard ETF equivalent to VSIAX, both of them tracking the "CRSP US Small Cap Value Index".  VBR hasn't generated any such capital gains either.  So on this front, all the tickers mentioned in this paragraph seem to be perfectly efficient.  Otherwise, I'm looking at dividends.  I'd rather have no dividends at all, because they're a form of forced tax realization and I might not want that.  Well, both VSIAX and VBR seem to produce quarterly dividends.  I divided each dividend by the price at the time, and other the past 12 months (four quarters totaled up), both of these tickers have produced apparently the identical 2.11%/year in dividends.  So the ETF VBR is no more tax efficient than the mutual fund VSIAX in this regard.  Meanwhile, mutual fund FXIAX and ETF SPY have distributed 1.31% and 1.24% in dividends, respectively, and zero capital gains.  So again it seems like the ETF is NOT any more tax efficient than the mutual fund considered.  It seems like the ETFs might have no choice but to issue the same dividends when tracking the same index as the mutual fund.  So...  am I understanding and following these things correctly?  Or am I missing something.

2) Well then, how about some yet other ETF that tracks "CRSP US Small Cap Value Index"?  I haven't been able to find one.  (Meanwhile, I found a good link about SCV in general, but I don't want to muddy this specific post with wider discussion.  Let's please just keep the discussion to this very narrow question.  Thanks.)

Thanks very much

I know that ETFs are generally more tax efficient than mutual funds.

So I'm seeking a tax efficient version of VSIAX, and am having difficulty.  I find the VBR ETF, but it seems no better.  I'm wondering about two things...

1) Are lots of mutual funds already more tax efficient than they used to be in the past?  Specifically, VSIAX doesn't seem to have created any capital gains for owners who didn't buy or sell during the year, short term or long term.  I confirmed a similar situation for VFIAX and FXIAX.  For years, NONE of them have generated any capital gains for folks that simply held them all year.  Meanwhile, VBR seems to be the Vanguard ETF equivalent to VSIAX, both of them tracking the "CRSP US Small Cap Value Index".  VBR hasn't generated any such capital gains either.  So on this front, all the tickers mentioned in this paragraph seem to be perfectly efficient.  Otherwise, I'm looking at dividends.  I'd rather have no dividends at all, because they're a form of forced tax realization and I might not want that.  Well, both VSIAX and VBR seem to produce quarterly dividends.  I divided each dividend by the price at the time, and other the past 12 months (four quarters totaled up), both of these tickers have produced apparently the identical 2.11%/year in dividends.  So the ETF VBR is no more tax efficient than the mutual fund VSIAX in this regard.  Meanwhile, mutual fund FXIAX and ETF SPY have distributed 1.31% and 1.24% in dividends, respectively, and zero capital gains.  So again it seems like the ETF is NOT any more tax efficient than the mutual fund considered.  It seems like the ETFs might have no choice but to issue the same dividends when tracking the same index as the mutual fund.  So...  am I understanding and following these things correctly?  Or am I missing something.

2) Well then, how about some yet other ETF that tracks "CRSP US Small Cap Value Index"?  I haven't been able to find one.  (Meanwhile, I found a good link about SCV in general, but I don't want to muddy this specific post with wider discussion.  Let's please just keep the discussion to this very narrow question.  Thanks.)

Thanks very much

I've held VSIAX in my IRA since 2011, in that time it has never paid out any capital gains, and I have been satisfied with its performance.  VBR is the equivalent ETF.  Both have an ER of .7%.  I am in my RMD years, and as money is moving from my IRA to my taxable account, I typically convert from a mutual fund to an EFT for tax considerations.  In this case however, I would be comfortable doing an in-kind conversion of VSIAX as there appears to be no additional tax advantage for holding VBR.  The only other consideration for me is the realtime trading for the ETF.

I know that ETFs are generally more tax efficient than mutual funds.

So I'm seeking a tax efficient version of VSIAX, and am having difficulty.  I find the VBR ETF, but it seems no better.  I'm wondering about two things...

1) Are lots of mutual funds already more tax efficient than they used to be in the past?  Specifically, VSIAX doesn't seem to have created any capital gains for owners who didn't buy or sell during the year, short term or long term.  I confirmed a similar situation for VFIAX and FXIAX.  For years, NONE of them have generated any capital gains for folks that simply held them all year.  Meanwhile, VBR seems to be the Vanguard ETF equivalent to VSIAX, both of them tracking the "CRSP US Small Cap Value Index".  VBR hasn't generated any such capital gains either.  So on this front, all the tickers mentioned in this paragraph seem to be perfectly efficient.  Otherwise, I'm looking at dividends.  I'd rather have no dividends at all, because they're a form of forced tax realization and I might not want that.  Well, both VSIAX and VBR seem to produce quarterly dividends.  I divided each dividend by the price at the time, and other the past 12 months (four quarters totaled up), both of these tickers have produced apparently the identical 2.11%/year in dividends.  So the ETF VBR is no more tax efficient than the mutual fund VSIAX in this regard.  Meanwhile, mutual fund FXIAX and ETF SPY have distributed 1.31% and 1.24% in dividends, respectively, and zero capital gains.  So again it seems like the ETF is NOT any more tax efficient than the mutual fund considered.  It seems like the ETFs might have no choice but to issue the same dividends when tracking the same index as the mutual fund.  So...  am I understanding and following these things correctly?  Or am I missing something.

2) Well then, how about some yet other ETF that tracks "CRSP US Small Cap Value Index"?  I haven't been able to find one.  (Meanwhile, I found a good link about SCV in general, but I don't want to muddy this specific post with wider discussion.  Let's please just keep the discussion to this very narrow question.  Thanks.)

Thanks very much

Thanks very much, @ROBERT ADAMS and @BRUCE MUNSHOWER .  Sounds grea... ER... crash crunch boom... say what?  25% of VBR's distributions were non-qualified?  I think that means regular income taxable, right?  I don't like this at all.  Hey, Bruce, where can I find this down low info actually written down somewhere?  It would be very important to have.

Otherwise, Bruce, I ask about this ETF vs [mutual] FUND thing.  I'm interested more in rebalancing than just selling.  So I like doing an automatic One-Triggers-Other trade between two ETFs.  It's also much easier to do this between two FUNDS, even though it happens at the end of the day for both.  I'm not trying to time the market or get any special advantage.  So end of day is at least apples-to-apples closing value for both the sold fund and bought fund.  What's causing me consternation is rebalancing and having to cross the ETF/FUND boundary.  I could sell an ETF at 3:55pm and then put in an order to buy a FUND.  My broker should credit me the unsettled money.  I'll only be "out of the market" for 5 minutes.  (I wouldn't risk 3:59pm, LOL.)  But going the other way is a real pickle.  I have to sell a FUND at today's close, and then buy the ETF as early as I can tomorrow, with the possibility of big changes between them.

I'm not sure how to get around this inefficiency.  The FUNDs are normally lower expense ratio than ETFs.  So I prefer them.  But then there's rebalancing inefficiencies as I've described.  For the moment, I'm keeping half in FUND and half in essentially equivalent ETF, so that when rebalance time comes, I have both options ready in order to rebalance in any direction! 

Bruce, yes and per above, I wonder if the VSIAX dividends are just as taxy as VBR (non-qualified).

Thanks again.

I've held VSIAX in my IRA since 2011, in that time it has never paid out any capital gains, and I have been satisfied with its performance.  VBR is the equivalent ETF.  Both have an ER of .7%.  I am in my RMD years, and as money is moving from my IRA to my taxable account, I typically convert from a mutual fund to an EFT for tax considerations.  In this case however, I would be comfortable doing an in-kind conversion of VSIAX as there appears to be no additional tax advantage for holding VBR.  The only other consideration for me is the realtime trading for the ETF.

I know that ETFs are generally more tax efficient than mutual funds.

So I'm seeking a tax efficient version of VSIAX, and am having difficulty.  I find the VBR ETF, but it seems no better.  I'm wondering about two things...

1) Are lots of mutual funds already more tax efficient than they used to be in the past?  Specifically, VSIAX doesn't seem to have created any capital gains for owners who didn't buy or sell during the year, short term or long term.  I confirmed a similar situation for VFIAX and FXIAX.  For years, NONE of them have generated any capital gains for folks that simply held them all year.  Meanwhile, VBR seems to be the Vanguard ETF equivalent to VSIAX, both of them tracking the "CRSP US Small Cap Value Index".  VBR hasn't generated any such capital gains either.  So on this front, all the tickers mentioned in this paragraph seem to be perfectly efficient.  Otherwise, I'm looking at dividends.  I'd rather have no dividends at all, because they're a form of forced tax realization and I might not want that.  Well, both VSIAX and VBR seem to produce quarterly dividends.  I divided each dividend by the price at the time, and other the past 12 months (four quarters totaled up), both of these tickers have produced apparently the identical 2.11%/year in dividends.  So the ETF VBR is no more tax efficient than the mutual fund VSIAX in this regard.  Meanwhile, mutual fund FXIAX and ETF SPY have distributed 1.31% and 1.24% in dividends, respectively, and zero capital gains.  So again it seems like the ETF is NOT any more tax efficient than the mutual fund considered.  It seems like the ETFs might have no choice but to issue the same dividends when tracking the same index as the mutual fund.  So...  am I understanding and following these things correctly?  Or am I missing something.

2) Well then, how about some yet other ETF that tracks "CRSP US Small Cap Value Index"?  I haven't been able to find one.  (Meanwhile, I found a good link about SCV in general, but I don't want to muddy this specific post with wider discussion.  Let's please just keep the discussion to this very narrow question.  Thanks.)

Thanks very much

@BRUCE MUNSHOWER I got your private message.  Man, I'm a 40+ year IT pro, and I can't figure out how to make that gui reply.  Detail of message has link to click to see inbox and reply.  At inbox, there's no reply option.

Anyway, by "low down info" I mean "the low down", an expression meaning the details.  Give me the low down.  What I meant was, where can I find historical detail on how dividends are divided between qualified and non-qualified, such as for VBR.  My LTCG tax rate is much lower than my regular income tax rate, so I don't like me no non-qualified dividends...  (Yes, I watch some interesting youtube videos sometimes.  There are expressions in the English language where an apparent double negative is actually a single negative.  "Don't like me no" sounds like a double negative, but it's indeed a single negative.  Of course, that sentence also had "non-" in it, which I guess makes it an apparent triple negative.  But it only means a double, by standard using.)

Thanks very much, @ROBERT ADAMS and @BRUCE MUNSHOWER .  Sounds grea... ER... crash crunch boom... say what?  25% of VBR's distributions were non-qualified?  I think that means regular income taxable, right?  I don't like this at all.  Hey, Bruce, where can I find this down low info actually written down somewhere?  It would be very important to have.

Otherwise, Bruce, I ask about this ETF vs [mutual] FUND thing.  I'm interested more in rebalancing than just selling.  So I like doing an automatic One-Triggers-Other trade between two ETFs.  It's also much easier to do this between two FUNDS, even though it happens at the end of the day for both.  I'm not trying to time the market or get any special advantage.  So end of day is at least apples-to-apples closing value for both the sold fund and bought fund.  What's causing me consternation is rebalancing and having to cross the ETF/FUND boundary.  I could sell an ETF at 3:55pm and then put in an order to buy a FUND.  My broker should credit me the unsettled money.  I'll only be "out of the market" for 5 minutes.  (I wouldn't risk 3:59pm, LOL.)  But going the other way is a real pickle.  I have to sell a FUND at today's close, and then buy the ETF as early as I can tomorrow, with the possibility of big changes between them.

I'm not sure how to get around this inefficiency.  The FUNDs are normally lower expense ratio than ETFs.  So I prefer them.  But then there's rebalancing inefficiencies as I've described.  For the moment, I'm keeping half in FUND and half in essentially equivalent ETF, so that when rebalance time comes, I have both options ready in order to rebalance in any direction! 

Bruce, yes and per above, I wonder if the VSIAX dividends are just as taxy as VBR (non-qualified).

Thanks again.

I've held VSIAX in my IRA since 2011, in that time it has never paid out any capital gains, and I have been satisfied with its performance.  VBR is the equivalent ETF.  Both have an ER of .7%.  I am in my RMD years, and as money is moving from my IRA to my taxable account, I typically convert from a mutual fund to an EFT for tax considerations.  In this case however, I would be comfortable doing an in-kind conversion of VSIAX as there appears to be no additional tax advantage for holding VBR.  The only other consideration for me is the realtime trading for the ETF.

I know that ETFs are generally more tax efficient than mutual funds.

So I'm seeking a tax efficient version of VSIAX, and am having difficulty.  I find the VBR ETF, but it seems no better.  I'm wondering about two things...

1) Are lots of mutual funds already more tax efficient than they used to be in the past?  Specifically, VSIAX doesn't seem to have created any capital gains for owners who didn't buy or sell during the year, short term or long term.  I confirmed a similar situation for VFIAX and FXIAX.  For years, NONE of them have generated any capital gains for folks that simply held them all year.  Meanwhile, VBR seems to be the Vanguard ETF equivalent to VSIAX, both of them tracking the "CRSP US Small Cap Value Index".  VBR hasn't generated any such capital gains either.  So on this front, all the tickers mentioned in this paragraph seem to be perfectly efficient.  Otherwise, I'm looking at dividends.  I'd rather have no dividends at all, because they're a form of forced tax realization and I might not want that.  Well, both VSIAX and VBR seem to produce quarterly dividends.  I divided each dividend by the price at the time, and other the past 12 months (four quarters totaled up), both of these tickers have produced apparently the identical 2.11%/year in dividends.  So the ETF VBR is no more tax efficient than the mutual fund VSIAX in this regard.  Meanwhile, mutual fund FXIAX and ETF SPY have distributed 1.31% and 1.24% in dividends, respectively, and zero capital gains.  So again it seems like the ETF is NOT any more tax efficient than the mutual fund considered.  It seems like the ETFs might have no choice but to issue the same dividends when tracking the same index as the mutual fund.  So...  am I understanding and following these things correctly?  Or am I missing something.

2) Well then, how about some yet other ETF that tracks "CRSP US Small Cap Value Index"?  I haven't been able to find one.  (Meanwhile, I found a good link about SCV in general, but I don't want to muddy this specific post with wider discussion.  Let's please just keep the discussion to this very narrow question.  Thanks.)

Thanks very much

@BRUCE MUNSHOWER I got your private message.  Man, I'm a 40+ year IT pro, and I can't figure out how to make that gui reply.  Detail of message has link to click to see inbox and reply.  At inbox, there's no reply option.

Anyway, by "low down info" I mean "the low down", an expression meaning the details.  Give me the low down.  What I meant was, where can I find historical detail on how dividends are divided between qualified and non-qualified, such as for VBR.  My LTCG tax rate is much lower than my regular income tax rate, so I don't like me no non-qualified dividends...  (Yes, I watch some interesting youtube videos sometimes.  There are expressions in the English language where an apparent double negative is actually a single negative.  "Don't like me no" sounds like a double negative, but it's indeed a single negative.  Of course, that sentence also had "non-" in it, which I guess makes it an apparent triple negative.  But it only means a double, by standard using.)

Thanks very much, @ROBERT ADAMS and @BRUCE MUNSHOWER .  Sounds grea... ER... crash crunch boom... say what?  25% of VBR's distributions were non-qualified?  I think that means regular income taxable, right?  I don't like this at all.  Hey, Bruce, where can I find this down low info actually written down somewhere?  It would be very important to have.

Otherwise, Bruce, I ask about this ETF vs [mutual] FUND thing.  I'm interested more in rebalancing than just selling.  So I like doing an automatic One-Triggers-Other trade between two ETFs.  It's also much easier to do this between two FUNDS, even though it happens at the end of the day for both.  I'm not trying to time the market or get any special advantage.  So end of day is at least apples-to-apples closing value for both the sold fund and bought fund.  What's causing me consternation is rebalancing and having to cross the ETF/FUND boundary.  I could sell an ETF at 3:55pm and then put in an order to buy a FUND.  My broker should credit me the unsettled money.  I'll only be "out of the market" for 5 minutes.  (I wouldn't risk 3:59pm, LOL.)  But going the other way is a real pickle.  I have to sell a FUND at today's close, and then buy the ETF as early as I can tomorrow, with the possibility of big changes between them.

I'm not sure how to get around this inefficiency.  The FUNDs are normally lower expense ratio than ETFs.  So I prefer them.  But then there's rebalancing inefficiencies as I've described.  For the moment, I'm keeping half in FUND and half in essentially equivalent ETF, so that when rebalance time comes, I have both options ready in order to rebalance in any direction! 

Bruce, yes and per above, I wonder if the VSIAX dividends are just as taxy as VBR (non-qualified).

Thanks again.

I've held VSIAX in my IRA since 2011, in that time it has never paid out any capital gains, and I have been satisfied with its performance.  VBR is the equivalent ETF.  Both have an ER of .7%.  I am in my RMD years, and as money is moving from my IRA to my taxable account, I typically convert from a mutual fund to an EFT for tax considerations.  In this case however, I would be comfortable doing an in-kind conversion of VSIAX as there appears to be no additional tax advantage for holding VBR.  The only other consideration for me is the realtime trading for the ETF.

I know that ETFs are generally more tax efficient than mutual funds.

So I'm seeking a tax efficient version of VSIAX, and am having difficulty.  I find the VBR ETF, but it seems no better.  I'm wondering about two things...

1) Are lots of mutual funds already more tax efficient than they used to be in the past?  Specifically, VSIAX doesn't seem to have created any capital gains for owners who didn't buy or sell during the year, short term or long term.  I confirmed a similar situation for VFIAX and FXIAX.  For years, NONE of them have generated any capital gains for folks that simply held them all year.  Meanwhile, VBR seems to be the Vanguard ETF equivalent to VSIAX, both of them tracking the "CRSP US Small Cap Value Index".  VBR hasn't generated any such capital gains either.  So on this front, all the tickers mentioned in this paragraph seem to be perfectly efficient.  Otherwise, I'm looking at dividends.  I'd rather have no dividends at all, because they're a form of forced tax realization and I might not want that.  Well, both VSIAX and VBR seem to produce quarterly dividends.  I divided each dividend by the price at the time, and other the past 12 months (four quarters totaled up), both of these tickers have produced apparently the identical 2.11%/year in dividends.  So the ETF VBR is no more tax efficient than the mutual fund VSIAX in this regard.  Meanwhile, mutual fund FXIAX and ETF SPY have distributed 1.31% and 1.24% in dividends, respectively, and zero capital gains.  So again it seems like the ETF is NOT any more tax efficient than the mutual fund considered.  It seems like the ETFs might have no choice but to issue the same dividends when tracking the same index as the mutual fund.  So...  am I understanding and following these things correctly?  Or am I missing something.

2) Well then, how about some yet other ETF that tracks "CRSP US Small Cap Value Index"?  I haven't been able to find one.  (Meanwhile, I found a good link about SCV in general, but I don't want to muddy this specific post with wider discussion.  Let's please just keep the discussion to this very narrow question.  Thanks.)

Thanks very much

Thanks very much, @ROBERT ADAMS and @BRUCE MUNSHOWER .  Sounds grea... ER... crash crunch boom... say what?  25% of VBR's distributions were non-qualified?  I think that means regular income taxable, right?  I don't like this at all.  Hey, Bruce, where can I find this down low info actually written down somewhere?  It would be very important to have.

Otherwise, Bruce, I ask about this ETF vs [mutual] FUND thing.  I'm interested more in rebalancing than just selling.  So I like doing an automatic One-Triggers-Other trade between two ETFs.  It's also much easier to do this between two FUNDS, even though it happens at the end of the day for both.  I'm not trying to time the market or get any special advantage.  So end of day is at least apples-to-apples closing value for both the sold fund and bought fund.  What's causing me consternation is rebalancing and having to cross the ETF/FUND boundary.  I could sell an ETF at 3:55pm and then put in an order to buy a FUND.  My broker should credit me the unsettled money.  I'll only be "out of the market" for 5 minutes.  (I wouldn't risk 3:59pm, LOL.)  But going the other way is a real pickle.  I have to sell a FUND at today's close, and then buy the ETF as early as I can tomorrow, with the possibility of big changes between them.

I'm not sure how to get around this inefficiency.  The FUNDs are normally lower expense ratio than ETFs.  So I prefer them.  But then there's rebalancing inefficiencies as I've described.  For the moment, I'm keeping half in FUND and half in essentially equivalent ETF, so that when rebalance time comes, I have both options ready in order to rebalance in any direction! 

Bruce, yes and per above, I wonder if the VSIAX dividends are just as taxy as VBR (non-qualified).

Thanks again.

------------------------------
Helmut Forren

Original Message:
Sent: 07-22-2025 12:31
From: BRUCE MUNSHOWER
Subject: Tax efficient ETF version of VSIAX mutual fund?

I've held VSIAX in my IRA since 2011, in that time it has never paid out any capital gains, and I have been satisfied with its performance.  VBR is the equivalent ETF.  Both have an ER of .7%.  I am in my RMD years, and as money is moving from my IRA to my taxable account, I typically convert from a mutual fund to an EFT for tax considerations.  In this case however, I would be comfortable doing an in-kind conversion of VSIAX as there appears to be no additional tax advantage for holding VBR.  The only other consideration for me is the realtime trading for the ETF.

------------------------------
BRUCE MUNSHOWER

Original Message:
Sent: 07-21-2025 15:42
From: Helmut Forren
Subject: Tax efficient ETF version of VSIAX mutual fund?

I know that ETFs are generally more tax efficient than mutual funds.

So I'm seeking a tax efficient version of VSIAX, and am having difficulty.  I find the VBR ETF, but it seems no better.  I'm wondering about two things...

1) Are lots of mutual funds already more tax efficient than they used to be in the past?  Specifically, VSIAX doesn't seem to have created any capital gains for owners who didn't buy or sell during the year, short term or long term.  I confirmed a similar situation for VFIAX and FXIAX.  For years, NONE of them have generated any capital gains for folks that simply held them all year.  Meanwhile, VBR seems to be the Vanguard ETF equivalent to VSIAX, both of them tracking the "CRSP US Small Cap Value Index".  VBR hasn't generated any such capital gains either.  So on this front, all the tickers mentioned in this paragraph seem to be perfectly efficient.  Otherwise, I'm looking at dividends.  I'd rather have no dividends at all, because they're a form of forced tax realization and I might not want that.  Well, both VSIAX and VBR seem to produce quarterly dividends.  I divided each dividend by the price at the time, and other the past 12 months (four quarters totaled up), both of these tickers have produced apparently the identical 2.11%/year in dividends.  So the ETF VBR is no more tax efficient than the mutual fund VSIAX in this regard.  Meanwhile, mutual fund FXIAX and ETF SPY have distributed 1.31% and 1.24% in dividends, respectively, and zero capital gains.  So again it seems like the ETF is NOT any more tax efficient than the mutual fund considered.  It seems like the ETFs might have no choice but to issue the same dividends when tracking the same index as the mutual fund.  So...  am I understanding and following these things correctly?  Or am I missing something.

2) Well then, how about some yet other ETF that tracks "CRSP US Small Cap Value Index"?  I haven't been able to find one.  (Meanwhile, I found a good link about SCV in general, but I don't want to muddy this specific post with wider discussion.  Let's please just keep the discussion to this very narrow question.  Thanks.)

Thanks very much

------------------------------
Helmut Forren
------------------------------

For more than a decade, I have been searching for a site that provided qualified-distribution information for ETFs. If ANYBODY out there knows where it can be found, PLEASE post it here!! I've generally relied on portfolio turnover as a proxy, but it's not always very accurate, and most ETFs (and I assume, most funds in general) vary from year to year in the relative distribution quantities. As with end-of-year distributions of short-term capital gain from mutual funds, I just have to wait for my 1099s to be issued before I get the non-qualified-distributions surprises. 

VGT has issued nothing but qualified dividends in the 5+ years I've held it. The last time SCHD issued non-qualified dividends (and a relatively small percentage then) was in 2020. All of my other ETFs vary from year to year. Since 2012, my personal annual non-qualified distributions from ETFs have been as low as 3% and as high as 11% of total ETF distributions. Of course, ALL of my dividends from individual stocks are qualified. 

------------------------------
Rob Adams

Original Message:
Sent: 07-22-2025 13:58
From: Helmut Forren
Subject: Tax efficient ETF version of VSIAX mutual fund?

Thanks very much, @ROBERT ADAMS and @BRUCE MUNSHOWER .  Sounds grea... ER... crash crunch boom... say what?  25% of VBR's distributions were non-qualified?  I think that means regular income taxable, right?  I don't like this at all.  Hey, Bruce, where can I find this down low info actually written down somewhere?  It would be very important to have.

Otherwise, Bruce, I ask about this ETF vs [mutual] FUND thing.  I'm interested more in rebalancing than just selling.  So I like doing an automatic One-Triggers-Other trade between two ETFs.  It's also much easier to do this between two FUNDS, even though it happens at the end of the day for both.  I'm not trying to time the market or get any special advantage.  So end of day is at least apples-to-apples closing value for both the sold fund and bought fund.  What's causing me consternation is rebalancing and having to cross the ETF/FUND boundary.  I could sell an ETF at 3:55pm and then put in an order to buy a FUND.  My broker should credit me the unsettled money.  I'll only be "out of the market" for 5 minutes.  (I wouldn't risk 3:59pm, LOL.)  But going the other way is a real pickle.  I have to sell a FUND at today's close, and then buy the ETF as early as I can tomorrow, with the possibility of big changes between them.

I'm not sure how to get around this inefficiency.  The FUNDs are normally lower expense ratio than ETFs.  So I prefer them.  But then there's rebalancing inefficiencies as I've described.  For the moment, I'm keeping half in FUND and half in essentially equivalent ETF, so that when rebalance time comes, I have both options ready in order to rebalance in any direction! 

Bruce, yes and per above, I wonder if the VSIAX dividends are just as taxy as VBR (non-qualified).

Thanks again.

------------------------------
Helmut Forren

Original Message:
Sent: 07-22-2025 12:31
From: BRUCE MUNSHOWER
Subject: Tax efficient ETF version of VSIAX mutual fund?

I've held VSIAX in my IRA since 2011, in that time it has never paid out any capital gains, and I have been satisfied with its performance.  VBR is the equivalent ETF.  Both have an ER of .7%.  I am in my RMD years, and as money is moving from my IRA to my taxable account, I typically convert from a mutual fund to an EFT for tax considerations.  In this case however, I would be comfortable doing an in-kind conversion of VSIAX as there appears to be no additional tax advantage for holding VBR.  The only other consideration for me is the realtime trading for the ETF.

------------------------------
BRUCE MUNSHOWER

Original Message:
Sent: 07-21-2025 15:42
From: Helmut Forren
Subject: Tax efficient ETF version of VSIAX mutual fund?

I know that ETFs are generally more tax efficient than mutual funds.

So I'm seeking a tax efficient version of VSIAX, and am having difficulty.  I find the VBR ETF, but it seems no better.  I'm wondering about two things...

1) Are lots of mutual funds already more tax efficient than they used to be in the past?  Specifically, VSIAX doesn't seem to have created any capital gains for owners who didn't buy or sell during the year, short term or long term.  I confirmed a similar situation for VFIAX and FXIAX.  For years, NONE of them have generated any capital gains for folks that simply held them all year.  Meanwhile, VBR seems to be the Vanguard ETF equivalent to VSIAX, both of them tracking the "CRSP US Small Cap Value Index".  VBR hasn't generated any such capital gains either.  So on this front, all the tickers mentioned in this paragraph seem to be perfectly efficient.  Otherwise, I'm looking at dividends.  I'd rather have no dividends at all, because they're a form of forced tax realization and I might not want that.  Well, both VSIAX and VBR seem to produce quarterly dividends.  I divided each dividend by the price at the time, and other the past 12 months (four quarters totaled up), both of these tickers have produced apparently the identical 2.11%/year in dividends.  So the ETF VBR is no more tax efficient than the mutual fund VSIAX in this regard.  Meanwhile, mutual fund FXIAX and ETF SPY have distributed 1.31% and 1.24% in dividends, respectively, and zero capital gains.  So again it seems like the ETF is NOT any more tax efficient than the mutual fund considered.  It seems like the ETFs might have no choice but to issue the same dividends when tracking the same index as the mutual fund.  So...  am I understanding and following these things correctly?  Or am I missing something.

2) Well then, how about some yet other ETF that tracks "CRSP US Small Cap Value Index"?  I haven't been able to find one.  (Meanwhile, I found a good link about SCV in general, but I don't want to muddy this specific post with wider discussion.  Let's please just keep the discussion to this very narrow question.  Thanks.)

Thanks very much

------------------------------
Helmut Forren
------------------------------

Note that as long as your itemized deductions (or standard deduction) are larger than your ordinary income (which includes non-qualified dividends), you still can get the full benefit of qualified dividends and long-term capital gains. Your deductions are first applied to reduce your ordinary income before reducing your qualified dividends and LTCG.

------------------------------
Rob Adams

Original Message:
Sent: 07-22-2025 21:18
From: ROBERT ADAMS
Subject: Tax efficient ETF version of VSIAX mutual fund?

For more than a decade, I have been searching for a site that provided qualified-distribution information for ETFs. If ANYBODY out there knows where it can be found, PLEASE post it here!! I've generally relied on portfolio turnover as a proxy, but it's not always very accurate, and most ETFs (and I assume, most funds in general) vary from year to year in the relative distribution quantities. As with end-of-year distributions of short-term capital gain from mutual funds, I just have to wait for my 1099s to be issued before I get the non-qualified-distributions surprises. 

VGT has issued nothing but qualified dividends in the 5+ years I've held it. The last time SCHD issued non-qualified dividends (and a relatively small percentage then) was in 2020. All of my other ETFs vary from year to year. Since 2012, my personal annual non-qualified distributions from ETFs have been as low as 3% and as high as 11% of total ETF distributions. Of course, ALL of my dividends from individual stocks are qualified. 

------------------------------
Rob Adams

Original Message:
Sent: 07-22-2025 13:58
From: Helmut Forren
Subject: Tax efficient ETF version of VSIAX mutual fund?

Thanks very much, @ROBERT ADAMS and @BRUCE MUNSHOWER .  Sounds grea... ER... crash crunch boom... say what?  25% of VBR's distributions were non-qualified?  I think that means regular income taxable, right?  I don't like this at all.  Hey, Bruce, where can I find this down low info actually written down somewhere?  It would be very important to have.

Otherwise, Bruce, I ask about this ETF vs [mutual] FUND thing.  I'm interested more in rebalancing than just selling.  So I like doing an automatic One-Triggers-Other trade between two ETFs.  It's also much easier to do this between two FUNDS, even though it happens at the end of the day for both.  I'm not trying to time the market or get any special advantage.  So end of day is at least apples-to-apples closing value for both the sold fund and bought fund.  What's causing me consternation is rebalancing and having to cross the ETF/FUND boundary.  I could sell an ETF at 3:55pm and then put in an order to buy a FUND.  My broker should credit me the unsettled money.  I'll only be "out of the market" for 5 minutes.  (I wouldn't risk 3:59pm, LOL.)  But going the other way is a real pickle.  I have to sell a FUND at today's close, and then buy the ETF as early as I can tomorrow, with the possibility of big changes between them.

I'm not sure how to get around this inefficiency.  The FUNDs are normally lower expense ratio than ETFs.  So I prefer them.  But then there's rebalancing inefficiencies as I've described.  For the moment, I'm keeping half in FUND and half in essentially equivalent ETF, so that when rebalance time comes, I have both options ready in order to rebalance in any direction! 

Bruce, yes and per above, I wonder if the VSIAX dividends are just as taxy as VBR (non-qualified).

Thanks again.

------------------------------
Helmut Forren

Original Message:
Sent: 07-22-2025 12:31
From: BRUCE MUNSHOWER
Subject: Tax efficient ETF version of VSIAX mutual fund?

I've held VSIAX in my IRA since 2011, in that time it has never paid out any capital gains, and I have been satisfied with its performance.  VBR is the equivalent ETF.  Both have an ER of .7%.  I am in my RMD years, and as money is moving from my IRA to my taxable account, I typically convert from a mutual fund to an EFT for tax considerations.  In this case however, I would be comfortable doing an in-kind conversion of VSIAX as there appears to be no additional tax advantage for holding VBR.  The only other consideration for me is the realtime trading for the ETF.

------------------------------
BRUCE MUNSHOWER

Original Message:
Sent: 07-21-2025 15:42
From: Helmut Forren
Subject: Tax efficient ETF version of VSIAX mutual fund?

I know that ETFs are generally more tax efficient than mutual funds.

So I'm seeking a tax efficient version of VSIAX, and am having difficulty.  I find the VBR ETF, but it seems no better.  I'm wondering about two things...

1) Are lots of mutual funds already more tax efficient than they used to be in the past?  Specifically, VSIAX doesn't seem to have created any capital gains for owners who didn't buy or sell during the year, short term or long term.  I confirmed a similar situation for VFIAX and FXIAX.  For years, NONE of them have generated any capital gains for folks that simply held them all year.  Meanwhile, VBR seems to be the Vanguard ETF equivalent to VSIAX, both of them tracking the "CRSP US Small Cap Value Index".  VBR hasn't generated any such capital gains either.  So on this front, all the tickers mentioned in this paragraph seem to be perfectly efficient.  Otherwise, I'm looking at dividends.  I'd rather have no dividends at all, because they're a form of forced tax realization and I might not want that.  Well, both VSIAX and VBR seem to produce quarterly dividends.  I divided each dividend by the price at the time, and other the past 12 months (four quarters totaled up), both of these tickers have produced apparently the identical 2.11%/year in dividends.  So the ETF VBR is no more tax efficient than the mutual fund VSIAX in this regard.  Meanwhile, mutual fund FXIAX and ETF SPY have distributed 1.31% and 1.24% in dividends, respectively, and zero capital gains.  So again it seems like the ETF is NOT any more tax efficient than the mutual fund considered.  It seems like the ETFs might have no choice but to issue the same dividends when tracking the same index as the mutual fund.  So...  am I understanding and following these things correctly?  Or am I missing something.

2) Well then, how about some yet other ETF that tracks "CRSP US Small Cap Value Index"?  I haven't been able to find one.  (Meanwhile, I found a good link about SCV in general, but I don't want to muddy this specific post with wider discussion.  Let's please just keep the discussion to this very narrow question.  Thanks.)

Thanks very much

------------------------------
Helmut Forren
------------------------------

@BRUCE MUNSHOWER privately suggested 'the "tax efficiency" rating by Lipper available on Marketwatch'.  I found this at https://www.marketwatch.com/investing/fund/vbr?mod=search_symbol and it says the VBR tax efficiency is a 5.  This at least seems to be in direct conflict with @ROBERT ADAMS first comment on this thread about VBR in 2024 having 25% of its distributions as non-qualified.  I assume "distributions" were "dividends".

I really do not understand this.  At the same Marketwatch link I see "HOLDINGS" that appear to all be 99.19% stocks, with 0.80% other and 0.01% stock.  The VBR dividends seem to be about 2% of the stock price each year, over four quarterly dividends.  This implies 2024 had about 0.5% of the stock price in non-qualified events.  Hmmm...  maybe I'm narrowing in on two things.  That 0.80% holding of other might be extremely tax INefficient.  Otherwise, maybe 2024 saw them scrambling and trading a whole bunch of companies in shorter than 121 (61) days and therefore making those events non-qualified.  But then again, it's an index fund.  It shouldn't be doing a bunch of trading.  Ah, but maybe popularity pivoted, with lots of customer buys or sells, forcing them to buy and sell in lockstep in order to support the total assets invested.  I'm just guessing now, with just enough knowledge to be dangerous.

My general dislike is that I can't control the tax events.  I'd far rather have ZERO dividends.  But maybe this is impossible if the index tracking holdings produce dividends by definition.  My income bracket varies up and down.  Sometimes my regular income is below the standard deduction (0% regular income tax), and sometimes its far above that (24% regular income tax).  In a low year, I want to take distributions, either dividends or sales, in order to pay 0% regular income tax (as well as 0% LTCG tax).  In a high year I'd rather not take any because I could just wait until the next year and get it at 0%, avoiding the 24% regular and 20%+3.8% LTCG+NIIT.  So for me, a "5" on tax efficiency should mean ZERO distributions if I don't want them.

Am I barking up a tree that doesn't even exist?

Well, I found this Bogleheads post: https://www.bogleheads.org/forum/viewtopic.php?t=449233

There, it seems the folks are going around in circles and finding that one simply can't even rely on previously posted data that they found.  It seems to be a forced case of "wait and see".  Also, 70% of the way down, "livesoft" mentions doing tax planning and paying 0% taxes on qualified dividends.  That person also mentions the top of the 0% LTCG tax bracket.  This person is possibly doing the same thing I'm doing in my low years.  And it seems they're stymied by the inability to get reliable info before the tax year ends.

This Bogleheads post does include Vanguard and iShares historical reference sources:

https://investor.vanguard.com/investor-resources-education/taxes/qdi-yearend-qualified-dividend-income?year=2024

https://www.ishares.com/us/library/tax

Do note that the total qualified vs non-qualified split does [seem to] depend on not only the ETF internal actions, but the buy/sell impact of the individual investor relative to that investor's holding period PLUS the implied holding periods when comparing the investors buy/sell timing to the ETF internal buy/sell timing.  It's possible that this is at the root of the inability for the ETF to predict. That is, if they internally buy a stock and then 10 days later a particular investor sells some ETF shares, then that individual investor has just indirectly held that stock for 10 days.  The impact won't be qualified.  I don't know if the individual stock gain matters, but if that individual stock issued a dividend during that time, then maybe that made the ...  Oh I think you know where I'm going.  I'm just GUESSING here.

[EDIT] I looked for VBR and VSIAX at the vanguard link above.  Both say the same 74.71% of dividends are qualified.  This is consistent with Robert saying [25.29%] were non-qualified.  Maybe this link really is useful, at least if you have no buy/sell during the year of your own.  This also lets one search for higher percentage qualified.  But that is of course a secondary concern to what type of thing you're trying to invest in!

------------------------------
Helmut Forren

Original Message:
Sent: 07-22-2025 21:41
From: ROBERT ADAMS
Subject: Tax efficient ETF version of VSIAX mutual fund?

Note that as long as your itemized deductions (or standard deduction) are larger than your ordinary income (which includes non-qualified dividends), you still can get the full benefit of qualified dividends and long-term capital gains. Your deductions are first applied to reduce your ordinary income before reducing your qualified dividends and LTCG.

------------------------------
Rob Adams

Original Message:
Sent: 07-22-2025 21:18
From: ROBERT ADAMS
Subject: Tax efficient ETF version of VSIAX mutual fund?

For more than a decade, I have been searching for a site that provided qualified-distribution information for ETFs. If ANYBODY out there knows where it can be found, PLEASE post it here!! I've generally relied on portfolio turnover as a proxy, but it's not always very accurate, and most ETFs (and I assume, most funds in general) vary from year to year in the relative distribution quantities. As with end-of-year distributions of short-term capital gain from mutual funds, I just have to wait for my 1099s to be issued before I get the non-qualified-distributions surprises. 

VGT has issued nothing but qualified dividends in the 5+ years I've held it. The last time SCHD issued non-qualified dividends (and a relatively small percentage then) was in 2020. All of my other ETFs vary from year to year. Since 2012, my personal annual non-qualified distributions from ETFs have been as low as 3% and as high as 11% of total ETF distributions. Of course, ALL of my dividends from individual stocks are qualified. 

------------------------------
Rob Adams

Original Message:
Sent: 07-22-2025 13:58
From: Helmut Forren
Subject: Tax efficient ETF version of VSIAX mutual fund?

Thanks very much, @ROBERT ADAMS and @BRUCE MUNSHOWER .  Sounds grea... ER... crash crunch boom... say what?  25% of VBR's distributions were non-qualified?  I think that means regular income taxable, right?  I don't like this at all.  Hey, Bruce, where can I find this down low info actually written down somewhere?  It would be very important to have.

Otherwise, Bruce, I ask about this ETF vs [mutual] FUND thing.  I'm interested more in rebalancing than just selling.  So I like doing an automatic One-Triggers-Other trade between two ETFs.  It's also much easier to do this between two FUNDS, even though it happens at the end of the day for both.  I'm not trying to time the market or get any special advantage.  So end of day is at least apples-to-apples closing value for both the sold fund and bought fund.  What's causing me consternation is rebalancing and having to cross the ETF/FUND boundary.  I could sell an ETF at 3:55pm and then put in an order to buy a FUND.  My broker should credit me the unsettled money.  I'll only be "out of the market" for 5 minutes.  (I wouldn't risk 3:59pm, LOL.)  But going the other way is a real pickle.  I have to sell a FUND at today's close, and then buy the ETF as early as I can tomorrow, with the possibility of big changes between them.

I'm not sure how to get around this inefficiency.  The FUNDs are normally lower expense ratio than ETFs.  So I prefer them.  But then there's rebalancing inefficiencies as I've described.  For the moment, I'm keeping half in FUND and half in essentially equivalent ETF, so that when rebalance time comes, I have both options ready in order to rebalance in any direction! 

Bruce, yes and per above, I wonder if the VSIAX dividends are just as taxy as VBR (non-qualified).

Thanks again.

------------------------------
Helmut Forren

Original Message:
Sent: 07-22-2025 12:31
From: BRUCE MUNSHOWER
Subject: Tax efficient ETF version of VSIAX mutual fund?

I've held VSIAX in my IRA since 2011, in that time it has never paid out any capital gains, and I have been satisfied with its performance.  VBR is the equivalent ETF.  Both have an ER of .7%.  I am in my RMD years, and as money is moving from my IRA to my taxable account, I typically convert from a mutual fund to an EFT for tax considerations.  In this case however, I would be comfortable doing an in-kind conversion of VSIAX as there appears to be no additional tax advantage for holding VBR.  The only other consideration for me is the realtime trading for the ETF.

------------------------------
BRUCE MUNSHOWER

Original Message:
Sent: 07-21-2025 15:42
From: Helmut Forren
Subject: Tax efficient ETF version of VSIAX mutual fund?

I know that ETFs are generally more tax efficient than mutual funds.

So I'm seeking a tax efficient version of VSIAX, and am having difficulty.  I find the VBR ETF, but it seems no better.  I'm wondering about two things...

1) Are lots of mutual funds already more tax efficient than they used to be in the past?  Specifically, VSIAX doesn't seem to have created any capital gains for owners who didn't buy or sell during the year, short term or long term.  I confirmed a similar situation for VFIAX and FXIAX.  For years, NONE of them have generated any capital gains for folks that simply held them all year.  Meanwhile, VBR seems to be the Vanguard ETF equivalent to VSIAX, both of them tracking the "CRSP US Small Cap Value Index".  VBR hasn't generated any such capital gains either.  So on this front, all the tickers mentioned in this paragraph seem to be perfectly efficient.  Otherwise, I'm looking at dividends.  I'd rather have no dividends at all, because they're a form of forced tax realization and I might not want that.  Well, both VSIAX and VBR seem to produce quarterly dividends.  I divided each dividend by the price at the time, and other the past 12 months (four quarters totaled up), both of these tickers have produced apparently the identical 2.11%/year in dividends.  So the ETF VBR is no more tax efficient than the mutual fund VSIAX in this regard.  Meanwhile, mutual fund FXIAX and ETF SPY have distributed 1.31% and 1.24% in dividends, respectively, and zero capital gains.  So again it seems like the ETF is NOT any more tax efficient than the mutual fund considered.  It seems like the ETFs might have no choice but to issue the same dividends when tracking the same index as the mutual fund.  So...  am I understanding and following these things correctly?  Or am I missing something.

2) Well then, how about some yet other ETF that tracks "CRSP US Small Cap Value Index"?  I haven't been able to find one.  (Meanwhile, I found a good link about SCV in general, but I don't want to muddy this specific post with wider discussion.  Let's please just keep the discussion to this very narrow question.  Thanks.)

Thanks very much

------------------------------
Helmut Forren
------------------------------

@BRUCE MUNSHOWER privately suggested 'the "tax efficiency" rating by Lipper available on Marketwatch'.  I found this at https://www.marketwatch.com/investing/fund/vbr?mod=search_symbol and it says the VBR tax efficiency is a 5.  This at least seems to be in direct conflict with @ROBERT ADAMS first comment on this thread about VBR in 2024 having 25% of its distributions as non-qualified.  I assume "distributions" were "dividends".

I really do not understand this.  At the same Marketwatch link I see "HOLDINGS" that appear to all be 99.19% stocks, with 0.80% other and 0.01% stock.  The VBR dividends seem to be about 2% of the stock price each year, over four quarterly dividends.  This implies 2024 had about 0.5% of the stock price in non-qualified events.  Hmmm...  maybe I'm narrowing in on two things.  That 0.80% holding of other might be extremely tax INefficient.  Otherwise, maybe 2024 saw them scrambling and trading a whole bunch of companies in shorter than 121 (61) days and therefore making those events non-qualified.  But then again, it's an index fund.  It shouldn't be doing a bunch of trading.  Ah, but maybe popularity pivoted, with lots of customer buys or sells, forcing them to buy and sell in lockstep in order to support the total assets invested.  I'm just guessing now, with just enough knowledge to be dangerous.

My general dislike is that I can't control the tax events.  I'd far rather have ZERO dividends.  But maybe this is impossible if the index tracking holdings produce dividends by definition.  My income bracket varies up and down.  Sometimes my regular income is below the standard deduction (0% regular income tax), and sometimes its far above that (24% regular income tax).  In a low year, I want to take distributions, either dividends or sales, in order to pay 0% regular income tax (as well as 0% LTCG tax).  In a high year I'd rather not take any because I could just wait until the next year and get it at 0%, avoiding the 24% regular and 20%+3.8% LTCG+NIIT.  So for me, a "5" on tax efficiency should mean ZERO distributions if I don't want them.

Am I barking up a tree that doesn't even exist?

Well, I found this Bogleheads post: https://www.bogleheads.org/forum/viewtopic.php?t=449233

There, it seems the folks are going around in circles and finding that one simply can't even rely on previously posted data that they found.  It seems to be a forced case of "wait and see".  Also, 70% of the way down, "livesoft" mentions doing tax planning and paying 0% taxes on qualified dividends.  That person also mentions the top of the 0% LTCG tax bracket.  This person is possibly doing the same thing I'm doing in my low years.  And it seems they're stymied by the inability to get reliable info before the tax year ends.

This Bogleheads post does include Vanguard and iShares historical reference sources:

https://investor.vanguard.com/investor-resources-education/taxes/qdi-yearend-qualified-dividend-income?year=2024

https://www.ishares.com/us/library/tax

Do note that the total qualified vs non-qualified split does [seem to] depend on not only the ETF internal actions, but the buy/sell impact of the individual investor relative to that investor's holding period PLUS the implied holding periods when comparing the investors buy/sell timing to the ETF internal buy/sell timing.  It's possible that this is at the root of the inability for the ETF to predict. That is, if they internally buy a stock and then 10 days later a particular investor sells some ETF shares, then that individual investor has just indirectly held that stock for 10 days.  The impact won't be qualified.  I don't know if the individual stock gain matters, but if that individual stock issued a dividend during that time, then maybe that made the ...  Oh I think you know where I'm going.  I'm just GUESSING here.

[EDIT] I looked for VBR and VSIAX at the vanguard link above.  Both say the same 74.71% of dividends are qualified.  This is consistent with Robert saying [25.29%] were non-qualified.  Maybe this link really is useful, at least if you have no buy/sell during the year of your own.  This also lets one search for higher percentage qualified.  But that is of course a secondary concern to what type of thing you're trying to invest in!

------------------------------
Helmut Forren

Original Message:
Sent: 07-22-2025 21:41
From: ROBERT ADAMS
Subject: Tax efficient ETF version of VSIAX mutual fund?

Note that as long as your itemized deductions (or standard deduction) are larger than your ordinary income (which includes non-qualified dividends), you still can get the full benefit of qualified dividends and long-term capital gains. Your deductions are first applied to reduce your ordinary income before reducing your qualified dividends and LTCG.

------------------------------
Rob Adams

Original Message:
Sent: 07-22-2025 21:18
From: ROBERT ADAMS
Subject: Tax efficient ETF version of VSIAX mutual fund?

For more than a decade, I have been searching for a site that provided qualified-distribution information for ETFs. If ANYBODY out there knows where it can be found, PLEASE post it here!! I've generally relied on portfolio turnover as a proxy, but it's not always very accurate, and most ETFs (and I assume, most funds in general) vary from year to year in the relative distribution quantities. As with end-of-year distributions of short-term capital gain from mutual funds, I just have to wait for my 1099s to be issued before I get the non-qualified-distributions surprises. 

VGT has issued nothing but qualified dividends in the 5+ years I've held it. The last time SCHD issued non-qualified dividends (and a relatively small percentage then) was in 2020. All of my other ETFs vary from year to year. Since 2012, my personal annual non-qualified distributions from ETFs have been as low as 3% and as high as 11% of total ETF distributions. Of course, ALL of my dividends from individual stocks are qualified. 

------------------------------
Rob Adams

Original Message:
Sent: 07-22-2025 13:58
From: Helmut Forren
Subject: Tax efficient ETF version of VSIAX mutual fund?

Thanks very much, @ROBERT ADAMS and @BRUCE MUNSHOWER .  Sounds grea... ER... crash crunch boom... say what?  25% of VBR's distributions were non-qualified?  I think that means regular income taxable, right?  I don't like this at all.  Hey, Bruce, where can I find this down low info actually written down somewhere?  It would be very important to have.

Otherwise, Bruce, I ask about this ETF vs [mutual] FUND thing.  I'm interested more in rebalancing than just selling.  So I like doing an automatic One-Triggers-Other trade between two ETFs.  It's also much easier to do this between two FUNDS, even though it happens at the end of the day for both.  I'm not trying to time the market or get any special advantage.  So end of day is at least apples-to-apples closing value for both the sold fund and bought fund.  What's causing me consternation is rebalancing and having to cross the ETF/FUND boundary.  I could sell an ETF at 3:55pm and then put in an order to buy a FUND.  My broker should credit me the unsettled money.  I'll only be "out of the market" for 5 minutes.  (I wouldn't risk 3:59pm, LOL.)  But going the other way is a real pickle.  I have to sell a FUND at today's close, and then buy the ETF as early as I can tomorrow, with the possibility of big changes between them.

I'm not sure how to get around this inefficiency.  The FUNDs are normally lower expense ratio than ETFs.  So I prefer them.  But then there's rebalancing inefficiencies as I've described.  For the moment, I'm keeping half in FUND and half in essentially equivalent ETF, so that when rebalance time comes, I have both options ready in order to rebalance in any direction! 

Bruce, yes and per above, I wonder if the VSIAX dividends are just as taxy as VBR (non-qualified).

Thanks again.

------------------------------
Helmut Forren

Original Message:
Sent: 07-22-2025 12:31
From: BRUCE MUNSHOWER
Subject: Tax efficient ETF version of VSIAX mutual fund?

I've held VSIAX in my IRA since 2011, in that time it has never paid out any capital gains, and I have been satisfied with its performance.  VBR is the equivalent ETF.  Both have an ER of .7%.  I am in my RMD years, and as money is moving from my IRA to my taxable account, I typically convert from a mutual fund to an EFT for tax considerations.  In this case however, I would be comfortable doing an in-kind conversion of VSIAX as there appears to be no additional tax advantage for holding VBR.  The only other consideration for me is the realtime trading for the ETF.

------------------------------
BRUCE MUNSHOWER

Original Message:
Sent: 07-21-2025 15:42
From: Helmut Forren
Subject: Tax efficient ETF version of VSIAX mutual fund?

I know that ETFs are generally more tax efficient than mutual funds.

So I'm seeking a tax efficient version of VSIAX, and am having difficulty.  I find the VBR ETF, but it seems no better.  I'm wondering about two things...

1) Are lots of mutual funds already more tax efficient than they used to be in the past?  Specifically, VSIAX doesn't seem to have created any capital gains for owners who didn't buy or sell during the year, short term or long term.  I confirmed a similar situation for VFIAX and FXIAX.  For years, NONE of them have generated any capital gains for folks that simply held them all year.  Meanwhile, VBR seems to be the Vanguard ETF equivalent to VSIAX, both of them tracking the "CRSP US Small Cap Value Index".  VBR hasn't generated any such capital gains either.  So on this front, all the tickers mentioned in this paragraph seem to be perfectly efficient.  Otherwise, I'm looking at dividends.  I'd rather have no dividends at all, because they're a form of forced tax realization and I might not want that.  Well, both VSIAX and VBR seem to produce quarterly dividends.  I divided each dividend by the price at the time, and other the past 12 months (four quarters totaled up), both of these tickers have produced apparently the identical 2.11%/year in dividends.  So the ETF VBR is no more tax efficient than the mutual fund VSIAX in this regard.  Meanwhile, mutual fund FXIAX and ETF SPY have distributed 1.31% and 1.24% in dividends, respectively, and zero capital gains.  So again it seems like the ETF is NOT any more tax efficient than the mutual fund considered.  It seems like the ETFs might have no choice but to issue the same dividends when tracking the same index as the mutual fund.  So...  am I understanding and following these things correctly?  Or am I missing something.

2) Well then, how about some yet other ETF that tracks "CRSP US Small Cap Value Index"?  I haven't been able to find one.  (Meanwhile, I found a good link about SCV in general, but I don't want to muddy this specific post with wider discussion.  Let's please just keep the discussion to this very narrow question.  Thanks.)

Thanks very much

------------------------------
Helmut Forren
------------------------------

Somebody mentioned XDIV has no dividends.  Well Portfolio Visualizer doesn't have it, so I can't compare to VSIAX for full large cap blend.  Also, at yahoo finance I notice an average volume of only 23,200.  This seems like an unsafe place to go. Ah, inception 7/9/25.  It's less than a month old.  I'd prefer a track record.

Anyway, there are many folks that believe in dividend investing.  But the raw data shows that dividends are absolutely nothing but forced sale of a portion of your holdings.  I'd far rather have the sale of holding fully under my own control, which means no dividends.  I can fit into my 0% LTCG bracket and pay my uncle nada, nothing, period.  And if I do something creative, like sell some unrelated non-stock asset, or do a Roth conversion, there might be a big regular income tax hit and I don't want my other stuff to be forced into 15% or 15%+3.8% or 20%+3.8%.  That's why I prefer no dividends.

Maybe after some study and a few years, we'll see what XDIV has done.

This reminds me of BOXX.  It's a tricky way to make your regular cash holdings earn LTCG, or at least CG, rather than regular income.  However, it's pretty new and there's a darned good chance that the IRS will say, "nice try, but no deal.  pay regular income tax on those gains that are comparable to interest earnings or short term treasury earnings."

@BRUCE MUNSHOWER privately suggested 'the "tax efficiency" rating by Lipper available on Marketwatch'.  I found this at https://www.marketwatch.com/investing/fund/vbr?mod=search_symbol and it says the VBR tax efficiency is a 5.  This at least seems to be in direct conflict with @ROBERT ADAMS first comment on this thread about VBR in 2024 having 25% of its distributions as non-qualified.  I assume "distributions" were "dividends".

I really do not understand this.  At the same Marketwatch link I see "HOLDINGS" that appear to all be 99.19% stocks, with 0.80% other and 0.01% stock.  The VBR dividends seem to be about 2% of the stock price each year, over four quarterly dividends.  This implies 2024 had about 0.5% of the stock price in non-qualified events.  Hmmm...  maybe I'm narrowing in on two things.  That 0.80% holding of other might be extremely tax INefficient.  Otherwise, maybe 2024 saw them scrambling and trading a whole bunch of companies in shorter than 121 (61) days and therefore making those events non-qualified.  But then again, it's an index fund.  It shouldn't be doing a bunch of trading.  Ah, but maybe popularity pivoted, with lots of customer buys or sells, forcing them to buy and sell in lockstep in order to support the total assets invested.  I'm just guessing now, with just enough knowledge to be dangerous.

My general dislike is that I can't control the tax events.  I'd far rather have ZERO dividends.  But maybe this is impossible if the index tracking holdings produce dividends by definition.  My income bracket varies up and down.  Sometimes my regular income is below the standard deduction (0% regular income tax), and sometimes its far above that (24% regular income tax).  In a low year, I want to take distributions, either dividends or sales, in order to pay 0% regular income tax (as well as 0% LTCG tax).  In a high year I'd rather not take any because I could just wait until the next year and get it at 0%, avoiding the 24% regular and 20%+3.8% LTCG+NIIT.  So for me, a "5" on tax efficiency should mean ZERO distributions if I don't want them.

Am I barking up a tree that doesn't even exist?

Well, I found this Bogleheads post: https://www.bogleheads.org/forum/viewtopic.php?t=449233

There, it seems the folks are going around in circles and finding that one simply can't even rely on previously posted data that they found.  It seems to be a forced case of "wait and see".  Also, 70% of the way down, "livesoft" mentions doing tax planning and paying 0% taxes on qualified dividends.  That person also mentions the top of the 0% LTCG tax bracket.  This person is possibly doing the same thing I'm doing in my low years.  And it seems they're stymied by the inability to get reliable info before the tax year ends.

This Bogleheads post does include Vanguard and iShares historical reference sources:

https://investor.vanguard.com/investor-resources-education/taxes/qdi-yearend-qualified-dividend-income?year=2024

https://www.ishares.com/us/library/tax

Do note that the total qualified vs non-qualified split does [seem to] depend on not only the ETF internal actions, but the buy/sell impact of the individual investor relative to that investor's holding period PLUS the implied holding periods when comparing the investors buy/sell timing to the ETF internal buy/sell timing.  It's possible that this is at the root of the inability for the ETF to predict. That is, if they internally buy a stock and then 10 days later a particular investor sells some ETF shares, then that individual investor has just indirectly held that stock for 10 days.  The impact won't be qualified.  I don't know if the individual stock gain matters, but if that individual stock issued a dividend during that time, then maybe that made the ...  Oh I think you know where I'm going.  I'm just GUESSING here.

[EDIT] I looked for VBR and VSIAX at the vanguard link above.  Both say the same 74.71% of dividends are qualified.  This is consistent with Robert saying [25.29%] were non-qualified.  Maybe this link really is useful, at least if you have no buy/sell during the year of your own.  This also lets one search for higher percentage qualified.  But that is of course a secondary concern to what type of thing you're trying to invest in!

------------------------------
Helmut Forren

Original Message:
Sent: 07-22-2025 21:41
From: ROBERT ADAMS
Subject: Tax efficient ETF version of VSIAX mutual fund?

Note that as long as your itemized deductions (or standard deduction) are larger than your ordinary income (which includes non-qualified dividends), you still can get the full benefit of qualified dividends and long-term capital gains. Your deductions are first applied to reduce your ordinary income before reducing your qualified dividends and LTCG.

------------------------------
Rob Adams

Original Message:
Sent: 07-22-2025 21:18
From: ROBERT ADAMS
Subject: Tax efficient ETF version of VSIAX mutual fund?

For more than a decade, I have been searching for a site that provided qualified-distribution information for ETFs. If ANYBODY out there knows where it can be found, PLEASE post it here!! I've generally relied on portfolio turnover as a proxy, but it's not always very accurate, and most ETFs (and I assume, most funds in general) vary from year to year in the relative distribution quantities. As with end-of-year distributions of short-term capital gain from mutual funds, I just have to wait for my 1099s to be issued before I get the non-qualified-distributions surprises. 

VGT has issued nothing but qualified dividends in the 5+ years I've held it. The last time SCHD issued non-qualified dividends (and a relatively small percentage then) was in 2020. All of my other ETFs vary from year to year. Since 2012, my personal annual non-qualified distributions from ETFs have been as low as 3% and as high as 11% of total ETF distributions. Of course, ALL of my dividends from individual stocks are qualified. 

------------------------------
Rob Adams

Original Message:
Sent: 07-22-2025 13:58
From: Helmut Forren
Subject: Tax efficient ETF version of VSIAX mutual fund?

Thanks very much, @ROBERT ADAMS and @BRUCE MUNSHOWER .  Sounds grea... ER... crash crunch boom... say what?  25% of VBR's distributions were non-qualified?  I think that means regular income taxable, right?  I don't like this at all.  Hey, Bruce, where can I find this down low info actually written down somewhere?  It would be very important to have.

Otherwise, Bruce, I ask about this ETF vs [mutual] FUND thing.  I'm interested more in rebalancing than just selling.  So I like doing an automatic One-Triggers-Other trade between two ETFs.  It's also much easier to do this between two FUNDS, even though it happens at the end of the day for both.  I'm not trying to time the market or get any special advantage.  So end of day is at least apples-to-apples closing value for both the sold fund and bought fund.  What's causing me consternation is rebalancing and having to cross the ETF/FUND boundary.  I could sell an ETF at 3:55pm and then put in an order to buy a FUND.  My broker should credit me the unsettled money.  I'll only be "out of the market" for 5 minutes.  (I wouldn't risk 3:59pm, LOL.)  But going the other way is a real pickle.  I have to sell a FUND at today's close, and then buy the ETF as early as I can tomorrow, with the possibility of big changes between them.

I'm not sure how to get around this inefficiency.  The FUNDs are normally lower expense ratio than ETFs.  So I prefer them.  But then there's rebalancing inefficiencies as I've described.  For the moment, I'm keeping half in FUND and half in essentially equivalent ETF, so that when rebalance time comes, I have both options ready in order to rebalance in any direction! 

Bruce, yes and per above, I wonder if the VSIAX dividends are just as taxy as VBR (non-qualified).

Thanks again.

------------------------------
Helmut Forren

Original Message:
Sent: 07-22-2025 12:31
From: BRUCE MUNSHOWER
Subject: Tax efficient ETF version of VSIAX mutual fund?

I've held VSIAX in my IRA since 2011, in that time it has never paid out any capital gains, and I have been satisfied with its performance.  VBR is the equivalent ETF.  Both have an ER of .7%.  I am in my RMD years, and as money is moving from my IRA to my taxable account, I typically convert from a mutual fund to an EFT for tax considerations.  In this case however, I would be comfortable doing an in-kind conversion of VSIAX as there appears to be no additional tax advantage for holding VBR.  The only other consideration for me is the realtime trading for the ETF.

------------------------------
BRUCE MUNSHOWER

Original Message:
Sent: 07-21-2025 15:42
From: Helmut Forren
Subject: Tax efficient ETF version of VSIAX mutual fund?

I know that ETFs are generally more tax efficient than mutual funds.

So I'm seeking a tax efficient version of VSIAX, and am having difficulty.  I find the VBR ETF, but it seems no better.  I'm wondering about two things...

1) Are lots of mutual funds already more tax efficient than they used to be in the past?  Specifically, VSIAX doesn't seem to have created any capital gains for owners who didn't buy or sell during the year, short term or long term.  I confirmed a similar situation for VFIAX and FXIAX.  For years, NONE of them have generated any capital gains for folks that simply held them all year.  Meanwhile, VBR seems to be the Vanguard ETF equivalent to VSIAX, both of them tracking the "CRSP US Small Cap Value Index".  VBR hasn't generated any such capital gains either.  So on this front, all the tickers mentioned in this paragraph seem to be perfectly efficient.  Otherwise, I'm looking at dividends.  I'd rather have no dividends at all, because they're a form of forced tax realization and I might not want that.  Well, both VSIAX and VBR seem to produce quarterly dividends.  I divided each dividend by the price at the time, and other the past 12 months (four quarters totaled up), both of these tickers have produced apparently the identical 2.11%/year in dividends.  So the ETF VBR is no more tax efficient than the mutual fund VSIAX in this regard.  Meanwhile, mutual fund FXIAX and ETF SPY have distributed 1.31% and 1.24% in dividends, respectively, and zero capital gains.  So again it seems like the ETF is NOT any more tax efficient than the mutual fund considered.  It seems like the ETFs might have no choice but to issue the same dividends when tracking the same index as the mutual fund.  So...  am I understanding and following these things correctly?  Or am I missing something.

2) Well then, how about some yet other ETF that tracks "CRSP US Small Cap Value Index"?  I haven't been able to find one.  (Meanwhile, I found a good link about SCV in general, but I don't want to muddy this specific post with wider discussion.  Let's please just keep the discussion to this very narrow question.  Thanks.)

Thanks very much

------------------------------
Helmut Forren
------------------------------

I know that ETFs are generally more tax efficient than mutual funds.

So I'm seeking a tax efficient version of VSIAX, and am having difficulty.  I find the VBR ETF, but it seems no better.  I'm wondering about two things...

1) Are lots of mutual funds already more tax efficient than they used to be in the past?  Specifically, VSIAX doesn't seem to have created any capital gains for owners who didn't buy or sell during the year, short term or long term.  I confirmed a similar situation for VFIAX and FXIAX.  For years, NONE of them have generated any capital gains for folks that simply held them all year.  Meanwhile, VBR seems to be the Vanguard ETF equivalent to VSIAX, both of them tracking the "CRSP US Small Cap Value Index".  VBR hasn't generated any such capital gains either.  So on this front, all the tickers mentioned in this paragraph seem to be perfectly efficient.  Otherwise, I'm looking at dividends.  I'd rather have no dividends at all, because they're a form of forced tax realization and I might not want that.  Well, both VSIAX and VBR seem to produce quarterly dividends.  I divided each dividend by the price at the time, and other the past 12 months (four quarters totaled up), both of these tickers have produced apparently the identical 2.11%/year in dividends.  So the ETF VBR is no more tax efficient than the mutual fund VSIAX in this regard.  Meanwhile, mutual fund FXIAX and ETF SPY have distributed 1.31% and 1.24% in dividends, respectively, and zero capital gains.  So again it seems like the ETF is NOT any more tax efficient than the mutual fund considered.  It seems like the ETFs might have no choice but to issue the same dividends when tracking the same index as the mutual fund.  So...  am I understanding and following these things correctly?  Or am I missing something.

2) Well then, how about some yet other ETF that tracks "CRSP US Small Cap Value Index"?  I haven't been able to find one.  (Meanwhile, I found a good link about SCV in general, but I don't want to muddy this specific post with wider discussion.  Let's please just keep the discussion to this very narrow question.  Thanks.)

Thanks very much

@HF,

Below is a general description of why Vanguard index fund ETFs are essentially identical to their mutual fund counterparts:

"

Vanguard ETFs are often more tax-efficient than others thanks to a unique structural advantage and a few smart operational practices. Here's how they pull it off:

🧬 1. Unique Share-Class Structure

Vanguard pioneered a patented structure where ETFs are simply another share class of their mutual funds. This setup allows:

• In-kind redemptions: When large investors redeem ETF shares, Vanguard can offload the most appreciated securities without triggering capital gains inside the fund.
• Mutual fund tax benefit: Even investors in the mutual fund share class benefit from this mechanism, making Vanguard mutual funds with ETF share classes unusually tax-efficient.

🔄 2. Low Turnover from Indexing

Most Vanguard ETFs are passively managed index funds, which means:

• Minimal buying and selling of securities.
• Fewer taxable events like short-term capital gains.
• Holdings are only sold when the index itself changes, reducing the frequency of taxable distributions.

🏦 3. In-Kind Creation and Redemption

ETFs generally avoid selling securities to meet redemptions. Instead:

• Authorized participants exchange ETF shares for the underlying securities.
• Vanguard uses this to flush out low-basis shares, avoiding capital gains distributions to shareholders.

📉 4. Consistent Tax Efficiency Track Record

For example, Vanguard Total Stock Market Fund hasn't distributed capital gains since 2000-largely due to the ETF share class added in 2001. That's a remarkable streak compared to similar funds from other providers."

I know that ETFs are generally more tax efficient than mutual funds.

So I'm seeking a tax efficient version of VSIAX, and am having difficulty.  I find the VBR ETF, but it seems no better.  I'm wondering about two things...

1) Are lots of mutual funds already more tax efficient than they used to be in the past?  Specifically, VSIAX doesn't seem to have created any capital gains for owners who didn't buy or sell during the year, short term or long term.  I confirmed a similar situation for VFIAX and FXIAX.  For years, NONE of them have generated any capital gains for folks that simply held them all year.  Meanwhile, VBR seems to be the Vanguard ETF equivalent to VSIAX, both of them tracking the "CRSP US Small Cap Value Index".  VBR hasn't generated any such capital gains either.  So on this front, all the tickers mentioned in this paragraph seem to be perfectly efficient.  Otherwise, I'm looking at dividends.  I'd rather have no dividends at all, because they're a form of forced tax realization and I might not want that.  Well, both VSIAX and VBR seem to produce quarterly dividends.  I divided each dividend by the price at the time, and other the past 12 months (four quarters totaled up), both of these tickers have produced apparently the identical 2.11%/year in dividends.  So the ETF VBR is no more tax efficient than the mutual fund VSIAX in this regard.  Meanwhile, mutual fund FXIAX and ETF SPY have distributed 1.31% and 1.24% in dividends, respectively, and zero capital gains.  So again it seems like the ETF is NOT any more tax efficient than the mutual fund considered.  It seems like the ETFs might have no choice but to issue the same dividends when tracking the same index as the mutual fund.  So...  am I understanding and following these things correctly?  Or am I missing something.

2) Well then, how about some yet other ETF that tracks "CRSP US Small Cap Value Index"?  I haven't been able to find one.  (Meanwhile, I found a good link about SCV in general, but I don't want to muddy this specific post with wider discussion.  Let's please just keep the discussion to this very narrow question.  Thanks.)

Thanks very much

Thanks, Dave.  That still doesn't help the fact that both VBR and VSIAX hand out money quarterly, roughly 25% of it non-qualified.  This might be the best available for this asset class variant, but it's still annoying.  In my case, the anticipated regular taxable income is not negligible compared to my otherwise regular taxable income.  Nevertheless, that does explain things and I appreciate it from you, Dave.

@HF,

Below is a general description of why Vanguard index fund ETFs are essentially identical to their mutual fund counterparts:

"

Vanguard ETFs are often more tax-efficient than others thanks to a unique structural advantage and a few smart operational practices. Here's how they pull it off:

🧬 1. Unique Share-Class Structure

Vanguard pioneered a patented structure where ETFs are simply another share class of their mutual funds. This setup allows:

• In-kind redemptions: When large investors redeem ETF shares, Vanguard can offload the most appreciated securities without triggering capital gains inside the fund.
• Mutual fund tax benefit: Even investors in the mutual fund share class benefit from this mechanism, making Vanguard mutual funds with ETF share classes unusually tax-efficient.

🔄 2. Low Turnover from Indexing

Most Vanguard ETFs are passively managed index funds, which means:

• Minimal buying and selling of securities.
• Fewer taxable events like short-term capital gains.
• Holdings are only sold when the index itself changes, reducing the frequency of taxable distributions.

🏦 3. In-Kind Creation and Redemption

ETFs generally avoid selling securities to meet redemptions. Instead:

• Authorized participants exchange ETF shares for the underlying securities.
• Vanguard uses this to flush out low-basis shares, avoiding capital gains distributions to shareholders.

📉 4. Consistent Tax Efficiency Track Record

For example, Vanguard Total Stock Market Fund hasn't distributed capital gains since 2000-largely due to the ETF share class added in 2001. That's a remarkable streak compared to similar funds from other providers."

I know that ETFs are generally more tax efficient than mutual funds.

So I'm seeking a tax efficient version of VSIAX, and am having difficulty.  I find the VBR ETF, but it seems no better.  I'm wondering about two things...

1) Are lots of mutual funds already more tax efficient than they used to be in the past?  Specifically, VSIAX doesn't seem to have created any capital gains for owners who didn't buy or sell during the year, short term or long term.  I confirmed a similar situation for VFIAX and FXIAX.  For years, NONE of them have generated any capital gains for folks that simply held them all year.  Meanwhile, VBR seems to be the Vanguard ETF equivalent to VSIAX, both of them tracking the "CRSP US Small Cap Value Index".  VBR hasn't generated any such capital gains either.  So on this front, all the tickers mentioned in this paragraph seem to be perfectly efficient.  Otherwise, I'm looking at dividends.  I'd rather have no dividends at all, because they're a form of forced tax realization and I might not want that.  Well, both VSIAX and VBR seem to produce quarterly dividends.  I divided each dividend by the price at the time, and other the past 12 months (four quarters totaled up), both of these tickers have produced apparently the identical 2.11%/year in dividends.  So the ETF VBR is no more tax efficient than the mutual fund VSIAX in this regard.  Meanwhile, mutual fund FXIAX and ETF SPY have distributed 1.31% and 1.24% in dividends, respectively, and zero capital gains.  So again it seems like the ETF is NOT any more tax efficient than the mutual fund considered.  It seems like the ETFs might have no choice but to issue the same dividends when tracking the same index as the mutual fund.  So...  am I understanding and following these things correctly?  Or am I missing something.

2) Well then, how about some yet other ETF that tracks "CRSP US Small Cap Value Index"?  I haven't been able to find one.  (Meanwhile, I found a good link about SCV in general, but I don't want to muddy this specific post with wider discussion.  Let's please just keep the discussion to this very narrow question.  Thanks.)

Thanks very much