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Most investors don't understand ETF taxes

A majority of investors surveyed recently by BlackRock misunderstood the potential tax implications of exchange traded funds, with 55 percent of respondents saying they were not aware that an ETF could pay capital gains even if the security was not sold at a gain that year.

By Joyce Hanson | Updated on November 28, 2012

A majority of investors surveyed recently by BlackRock misunderstood the potential tax implications of exchange traded funds, with 55 percent of respondents saying they were not aware that an ETF could pay capital gains even if the security was not sold at a gain that year.

While 98 percent of ETFs offered by BlackRock’s iShares business are not expected to pay capital gains distributions, five bond funds will, according to the study results released Tuesday. Over the last 10 years, iShares, which is the largest ETF manager nationwide with 280 products listed in the United States, has not paid capital gains 98 percent of the time.

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