Tax Alpha Insider

Tax Alpha Insider

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Tax Alpha Insider
Tax Alpha Insider
The benefit of bonds without the drag

The benefit of bonds without the drag

No-income bond ETFs could change everything about fixed-income investing, including the bonds

Brent Sullivan's avatar
Brent Sullivan
Jun 15, 2025
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Tax Alpha Insider
Tax Alpha Insider
The benefit of bonds without the drag
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There are several notable trends in fixed-income investing. Electronic trading and automation come to mind. So do collateralized burrito obligations. 🌯🌯🌯

But removing income from fixed-income investing could be the biggest.

I am not talking about zero coupon bond ETFs like PIMCO’s ZROZ or iShares GOVZ, which distribute income every year.

I am talking about bond ETFs, which often don’t hold bonds and attempt1 to make zero distributions. They keep on accruing, and investors only pay tax (on price return) when they sell.

Bonds without income?

Moneyball Memes 💰⚾️ on X: "Big day for our dudes right here.  https://t.co/eHnVRfTHiP" / X
“Bonds without income?” (Moneyball)

There are at least two bummers from holding bond funds: taxes and cash drag.

Here’s an infographic summary of how bonds are taxed…

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