Why ETFs?

iShares ETFs are low-cost and tax efficient.

Low fees

iShares ETFs cost between 0.03% and 0.94% of your investment annually.1 That’s 1/3 the cost of a typical mutual fund.2

1/3 the Cost of a typical mutual fund

Less taxes

On average, the tax costs for iShares funds are half that of the average active mutual fund.3

On average, 97% of iShares funds have not paid a capital gains distribution in the past five years.4

When you sell your mutual fund or ETF shares at a gain, you will be subject to paying taxes on that gain.

Capital gains taxes can also be incurred even if you don't sell your shares, due to trading activity within the fund or ETF. Active mutual funds tend to frequently buy and sell securities in their quest to beat the index return, and often are subject to more capital gains distributions than ETFs.

Because most iShares ETFs are index funds, they tend to generate fewer undesirable capital gains distributions due in part to:

  • Less frequent trading within the ETF
  • Careful consideration of the tax consequences of each transaction

Potential savings

Adding together lower fees and lower taxes, iShares ETFs could save you nearly $60,000 on a portfolio of $250,000 over 10 years.

Traditional Mutual Funds vs. iShares ETF

Chart reflects the hypothetical growth of a fictional investment of $250,000 with an 8% return and assumes the reinvestment of dividends and capital gains. Fund expenses, including management fees and other expenses have been deducted. The graph is for illustrative purposes only and is not indicative of the performance of any actual fund or investment portfolio.

For more information on the differences between ETFs and mutual funds, click here.