Explore Two ETFs with Tax Strategies for High After-Tax Returns

Optimize Your Cash Holdings with Tax-Efficient ETFs

You can do better than a high-yield savings account. In today's interest rate environment, holding a significant amount of cash isn't an unreasonable position to take. While long-term investors will likely maximize their returns by buying and holding stocks, those needing cash in the near term or building an emergency fund are smart to hold cash. With high-yield savings accounts offering interest rates of 5% or more, you're earning a solid real return on your cash savings these days.

ETF Options for Tax Efficiency

• Short-term Treasury bonds: Treasury bonds pay interest just like any other bond. However, the interest earned from U.S. Treasuries is exempt from state income tax. Using short-duration Treasury bills can protect your cash from interest rate risk, making it a reliable investment option.
• Municipal bonds: Municipal bonds are exempt from federal income tax and, in some cases, state and local taxes. Focusing on short-term municipal bonds can reduce the impact of interest rate changes on your investments, providing a tax-efficient alternative for cash holdings.

Investors should carefully evaluate the tax advantages of these ETFs compared to traditional savings accounts to determine the best strategy for maximizing returns while minimizing tax liabilities.