Posted: 12/21/2025 3:15:54 PM EDT
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I recently opened up a brokerage account at fidelity and am looking for recommendations for the best tax efficient ETFs to start funding it. I am reading online that VOO, VTI, or VT are good choices for low expense ratios and are good for tax efficiency and broad market exposure. Let me know what you guys recommend and why. Thanks |
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VTI is my primary choice. I choose this because I like to total US equities market exposure, to include cap weighted ratios of mid and small caps, I like that it is traded throughout the day and can be instantly liquidated should I chose, and the ridiculously low expense ratio. If I wanted more international, I would not mind using VT for that goal, but I'd me lore inclined to just mix in some level of VXUS so I can control it better based on my desired ratio. But any quality index fund, whether ETF or even mutual fund like FSKAX or FXAIX, will be very tax efficient due to the nature of how they track the index and return capital gains. In general an ETF will be more tax efficient by design, but compared to a mutual fund like FXAIX, the difference will be incredibly small. It is *MORE* to invest in what you don't mind holding for the long term, than the difference in tax efficiency between VTI/FSKAX or VOO/FXAIX. And the reality is, either would be fine. Some people like to hold a little of both (such as VTI and VOO), just for the purpose of permuting some tax loss harvesting (if the occasion/opportunity arises.) I'd advise to avoid anything proprietary in a taxable account - if you ever decide to leave a brokerage and transfer to another one - you want something that will not require liquidation (taxable event) and will transfer the assets as they are. This is just another reason I like Vanguard's VTI/VOO. |
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Select the investment you want first, then look for the lowest expense ratios. The different tax treatment is so small that it is the last thing you should worry about. I don’t worry about the tax treatment at all. I use a couple Fidelity low/zero fee mutual funds along with voo and oneq. |
Moderate-Length Barrel Evangelist
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Would it be a true statement that any non-proprietary ETF with low or minimal dividends, infrequent internal changes, and few/no capital gains distributions would be tax efficient? If so, I can think of quite a few ETFs that seem tax efficient to me, some of which y’all already named. Just making sure we’re on the same page. |