Return of capital in income ETFs
Of the 376 income ETFs ETFIQ covers, 216 had a latest Rule 19a-1 estimate above 50% return of capital, as of Oct 21, 2026.
Return of capital is the part of a distribution that is not income or realized gains. It is not taxed when it is paid. It lowers your cost basis instead. Each income fund page shows the estimate beside the price change over the same window.
- 01Rule 19a-1 estimate
- A fund that pays a distribution from anything other than its net income must say, with the payment, where it estimates the money came from: net income, realized gains or return of capital (Rule 19a-1). ETFIQ prints the issuer’s own estimate, dated, on each income fund page. Income ETFs by return of capital ranks them.
- 02Year-end tax character
- The estimate is made before the fund’s tax year closes. Gains and losses later in the year change the split. The annual report and the Form 1099 give the final figure, and it often differs from the estimates.
- 03Section 1256 contract
- An option on a broad stock index, such as the S&P 500 index, is a Section 1256 contract. The fund marks it to market at year end and treats its gain or loss as 60% long term and 40% short term. Options on ETF shares or on one company’s shares are not. IRS Form 6781 sets out the rule.
- 04Return of capital and erosion
- Return of capital says where a payment came from for tax. It does not say whether the fund kept its value. Compare the cash paid with the price change and total return over the same window.
Definitions as ETFIQ uses them for income ETFs. Not tax advice. Standards and sources
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ETFIQ, Return of capital in income ETFs, data as of Oct 21, 2026. https://etfiq.com/learn/return-of-capital
ETFIQ. (Oct 21, 2026). Return of capital in income ETFs. Retrieved from https://etfiq.com/learn/return-of-capital
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Free to use with attribution for figures ETFIQ computes; issuer data stays under its owner's terms. The underlying files are at Open data.