Shelly's Modeling Agencies | Exchange Traded Funds

Shelly's Modeling Agencies perceives investing to be considerably easier for many people with exchange-traded funds, bonds or other assets that trade as a single stock. But during this year's tax season, investors may find that one of the biggest of ETF's -tax efficiency-doesn't live up to the hype. The biggest problem, analysts say, involves ETF's that use derivatives, financial instruments that can be used to bet on future prices. Investors poured millions of dollars into derivative-using ETF's in 2010, as a way to either double-down on bets on certain areas of the market or, in many cases, speculate on commodity prices. But investors who own these ETF's in a taxable account will be hit with a tax bill every year-regardless of whether or not they've sold their shares.

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