Maxed Out Retirement Accounts? These 3 ETFs Can Help Your Investments Keep Growing

Tax-Efficient Investing: New ETF Strategy Delivers Strong Returns Without the Tax Bill

Toronto, ON – investors seeking to maximize returns in non-registered accounts may have found a powerful new tool. A recently analyzed ETF portfolio strategy,utilizing “corporate class” ETFs and swap-based structures,demonstrates the potential for significant growth while sidestepping common capital gains taxes associated with dividend distributions.

The strategy, detailed in a recent financial analysis, centers around a simple, globally diversified mix: 50% U.S. equities, 25% Canadian equities, and 25% European equities. However, the key lies in how that exposure is achieved.

Rather of traditional dividend-paying ETFs,the portfolio leverages ETFs structured as “corporate class” funds that employ swap agreements. These structures aim to defer or eliminate taxable distributions, a major advantage for investors holding assets outside registered accounts like rrsps or TFSAs.

The ETF breakdown:

U.S. Exposure: The portfolio utilizes the Global X Corporate class ETF (TSX: [Ticker Symbol Redacted]), offering synthetic exposure to the S&P 500. It carries a management expense ratio (MER) of 0.11%, a trading expense ratio (TER) of 0.29%,and a potential swap fee of up to 0.50%.
Canadian Exposure: The Global X Corporate Class ETF (TSX: [Ticker Symbol Redacted]) is favored for its low cost, boasting a 0.08% MER, no TER, and a swap fee of up to 0.20%.
European Exposure: The Global X Europe 50 Index Corporate Class ETF (TSX: [ticker Symbol Redacted]) provides access to 50 of Europe’s largest companies, with a 0.19% MER, 0.31% TER, and a potential swap fee of up to 0.50%.

Backtest Results: Notable Growth, Zero Distributions

A backtest spanning January 2017 to July 2025, conducted without rebalancing to avoid triggering capital gains, revealed a compelling performance. The portfolio achieved a compound annual growth rate of 12.68%, transforming a $10,000 investment into $27,858 – all while avoiding taxes on distributions.

Why This Matters: The Tax Advantage

Traditional ETFs often distribute dividends and capital gains, triggering taxable events for investors in non-registered accounts. These swap-based ETFs,however,are designed to minimize or eliminate these distributions,allowing for tax-deferred growth.This is particularly beneficial for long-term investors.

Important Considerations:

While these ETFs have largely avoided taxable distributions to date, it’s not a guarantee. Fund managers retain discretion over distribution frequency. Investors should carefully review the fund factsheets and consult with a tax advisor.

Beyond the Backtest: A Long-Term Strategy

this portfolio offers broad exposure to major global markets,focusing on large- and mid-cap stocks. It intentionally excludes emerging markets like China and India, as well as regions like Australia and japan, acknowledging that no single ETF portfolio can be perfect.

Rebalancing for Optimal Results:

The analysis suggests a strategic approach to rebalancing: utilizing new contributions rather than selling existing holdings. this avoids triggering capital gains taxes while maintaining the desired asset allocation.

The Regulatory landscape:

The article notes potential future changes to regulations surrounding corporate class structures and swap contracts, a factor primarily impacting tax professionals and lobbyists.

Evergreen Insights for Investors:

Tax Efficiency is Key: For non-registered accounts, prioritizing tax efficiency can significantly boost long-term returns.
Diversification Remains crucial: A globally diversified portfolio mitigates risk and captures growth opportunities across different markets.
Understand ETF Structures: Familiarize yourself with the nuances of different ETF structures, including corporate class and swap-based funds.* Consult a Professional: Seek advice from a qualified financial advisor and tax professional to determine the best investment strategy for your individual circumstances.

what are the potential tax implications of holding these ETFs in a taxable brokerage account versus within a tax-advantaged retirement account?

You’ve diligently contributed to your 401(k), IRA, and other retirement accounts, hitting those contribution limits year after year. Congratulations! But what happens when you’ve maxed out your retirement savings and still have capital to invest? Don’t let that money sit idle. Exchange Traded Funds (ETFs) offer a powerful way to continue building wealth. As a refresher, ETFs (Exchange Traded Funds) are essentially baskets of securities that track an underlying index, like the S&P 500 or the MSCI World. They trade on exchanges just like stocks, offering diversification and liquidity. Here are three ETFs to consider when your retirement accounts are full, geared towards different risk tolerances and investment goals.

1. Broad Market Exposure: Vanguard Total Stock Market ETF (VTI)

For investors seeking extensive diversification, the Vanguard Total Stock Market ETF (VTI) is a cornerstone holding. This ETF aims to replicate the performance of the CRSP US Total Market Index, representing nearly 100% of the investable U.S. equity market.

Expense Ratio: A remarkably low 0.03%. This means for every $10,000 invested, you’ll pay just $3 in annual fees.

Holdings: Over 4,000 stocks, spanning large-cap, mid-cap, and small-cap companies.

Benefits: Extremely diversified,minimizing single-stock risk. Excellent for long-term growth. Low cost makes it ideal for buy-and-hold investors.

Considerations: Heavily weighted towards U.S. equities. May not be suitable for investors seeking international exposure without adding other ETFs.

Typical investor: Someone comfortable with market fluctuations and seeking long-term capital thankfulness. This is a solid choice for building a core portfolio beyond retirement accounts.

2. International Diversification: iShares MSCI EAFE ETF (EFA)

don’t put all your eggs in one basket – geographically speaking. The iShares MSCI EAFE ETF (EFA) provides exposure to developed markets outside of the U.S. and Canada. “EAFE” stands for Europe, Australasia, and Far East.

Expense Ratio: 0.33% – slightly higher than VTI, but still competitive for international exposure.

Holdings: Over 2,000 companies across 21 developed countries. Major holdings include companies like Nestle, Novartis, and Toyota.

Benefits: Reduces portfolio risk by diversifying across different economies and currencies. Captures growth opportunities in international markets.

Considerations: International markets can be more volatile than the U.S. market. Currency fluctuations can impact returns.

Practical Tip: Consider pairing EFA with a dedicated emerging markets ETF (see below) for even broader global diversification.

Real-World example: In 2023, while the U.S. market performed strongly, several European markets also saw significant gains, demonstrating the benefits of international diversification.

3. Emerging Markets Growth: Vanguard FTSE emerging Markets ETF (VWO)

For investors with a higher risk tolerance and a long-term outlook, the Vanguard FTSE Emerging Markets ETF (VWO) offers exposure to the rapid growth potential of developing economies.

Expense ratio: 0.08% – exceptionally low for an emerging markets ETF.

Holdings: Over 4,000 companies in countries like china, India, Brazil, and Taiwan.

Benefits: High growth potential as emerging economies develop. Diversification benefits beyond developed markets.

Considerations: emerging markets are generally more volatile than developed markets. Political and economic risks can be higher. Currency risk is also a factor.

case Study: India’s economic growth over the past decade has significantly benefited investors with exposure to Indian equities through ETFs like VWO. However,it’s crucial to remember that past performance is not indicative of future results.

Related Search Terms: Emerging market investing, Global stock market ETFs, International ETF diversification.

Understanding ETF Risks & Benefits

before diving in, it’s crucial to understand the broader landscape of ETF investing.

Benefits of ETFs:

Diversification: Instant access to a wide range of securities.

Low cost: Generally lower expense ratios compared to actively managed mutual funds.

Liquidity: Trade on exchanges like stocks,offering easy buying and selling.

Openness: Holdings are typically disclosed daily.

risks of ETFs:

Market Risk: ETFs are subject to the same market fluctuations as the underlying securities they track.

Tracking Error: An ETF may not perfectly replicate the performance of its underlying index.

Liquidity Risk: