Fund domicile

The country a fund is legally resident in, which determines the tax treaties that apply to the income its holdings pay it.

Example

Unreclaimable withholding of 15% on a 2.00% dividend yield costs 0.30% a year - six times a 0.05% expense ratio, and shown on no factsheet.

Important

Two funds tracking one index from different domiciles can deliver different net returns from identical holdings. The holder cannot reclaim what the fund could not, so check the domicile before comparing expense ratios.

Related terms

• Withholding tax — Tax deducted at source from a payment before it reaches the investor, most often on dividends or interest paid across a border.
• Expense ratio — The annual fee a fund charges, expressed as a percentage of the money you have in it.
• After-tax return — The return that remains once the tax on it has been paid. The only version of a return an investor can actually spend.
• Tax wrapper — An account or structure that changes how the assets inside it are taxed, without changing the assets themselves.

Lessons that explain it

• The cost you can read, the costs you cannot, and the tax bill you did not choose — Four layers of cost sit behind one printed number, and a fund's own trading can hand you a taxable event on a position showing no gain at all. (13 min)

All 578 terms in the Investing glossary