How Are Your Investments Taxed?

The type of investment you hold can have a big impact on your tax bill — and taxes can have an even bigger impact on total return.

What are some key considerations when looking at mutual funds, Exchange-Traded Funds (ETFs) and Separately Managed Accounts (SMAs) for your portfolio? Because what you own can be just as important as how you own it.

Mutual Funds vs. ETFs vs. SMAs

Although there are benefits to each investment vehicle, there are some distinct differences between mutual funds, ETFs and SMAs. Here are some important distinctions.

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	Mutual Fund	ETFs	SMAs
Customization Can you make it your own?	No	No	Yes – exclusions and adjustments allowed. Can customize to individual investor preferences.
Funding Where can the money come from?	Cash	Cash	Cash or in-kind
Pricing How often are the holdings valued?	Daily, at end of day	Constant	Daily or monthly
Liquidity When can I sell my investment?	Daily, at end of day	Instant – trades on an exchange
Tax Treatment How are taxes treated for investors?	Limited Tax Efficiency Trading to rebalance or to meet redemptions may cause capital gains for investors; gains may be paid once per year	Tax Efficient Structure enables mitigation of capital gain realization caused by trading, rebalancing and redemptions	Tax Managed Investors own individual securities and can use techniques such as tax-loss harvesting to minimize capital gains
Accounts to Consider Where should you hold this investment?	Tax-deferred and tax-exempt accounts	Tax-deferred, tax-exempt or taxable accounts	Taxable accounts

Disclosure

To determine if this Fund is an appropriate investment for you, carefully consider the Fund’s investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the Fund’s prospectus, which may be obtained by calling (800) 994-0755. Please read the prospectus carefully before investing.

Westwood ETFs are distributed by Northern Lights Distributors, LLC (Member FINRA). Northern Lights Distributors and Westwood ETFs (or Westwood Holdings Group, Inc.) are separate and unaffiliated.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice. No representation or warranty is made concerning the accuracy or completeness of any data compiled herein. Any statements non-factual in nature constitute only current opinion, which is subject to change. Any statements concerning financial market trends are based on current market conditions, which will fluctuate.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

Past performance is not indicative of future results. All information provided herein is for informational purposes only and is not intended to be, and should not be interpreted as, an offer, solicitation, or recommendation to buy or sell or otherwise invest in any of the securities/sectors/countries that may be mentioned.

Westwood ETF Insights

How Are Your Investments Taxed?

Mutual Funds vs. ETFs vs. SMAs

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