Don’t invest in an ETF until you understand the tax

Exchange-traded funds may be less attractive than they appear due to onerous tax reporting requirements

If you have opted for a life-wrapped investment product, there is nothing to be done, as the life company computes the taxes and passes them on to Revenue on your behalf.  Photographer: Simon Dawson/Bloomberg

If you have opted for a life-wrapped investment product, there is nothing to be done, as the life company computes the taxes and passes them on to Revenue on your behalf. Photographer: Simon Dawson/Bloomberg

If funds are more expensive than we might have otherwise thought – as evidenced by new European regulations (insert link: https://www.irishtimes.com/business/personal-finance/my-fund-is-costing-me-how-much-investors-are-paying-twice-as-much-as-they-think-1.3397651) – then it makes sense to seek out the cheapest fund you can find.

And, given the plethora of low-cost operators in the exchange-traded fund (ETF) space, it’s no surprise that many Irish investors have sought to invest in these products via a low-cost online stockbroker. The Dutch platform De Giro, for example, offers commission-free trading in a host of ETFs. And with total expense ratios, or charges, of as low as 0.1 per cent a year, at first glance it would seem a no-brainer for Irish investors to put their money away from pricey life-wrapped products and into these low cost alteratives.

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