What Do TR, PR, and H Mean at the End of ETF Names?
3 min read Β· Β· Korean original
Contents 4
Hey everyone, how's it going? This is Bitpunk. π Today I'll give you a clean rundown of three product types you'll often see when investing in ETFs: TR, PR, and H. Once you know these, you'll find it much less confusing to choose ETFs from now on. Let's get right into it!
TR (Total Return): Automatically Reinvests Dividends
First, TR products don't pay dividends out in cash. Instead, they automatically reflect them in a higher price. Since the price rises every time a dividend comes in instead of you receiving cash, compounding kicks in over time and your assets grow even more. That makes it a very favorable approach for long-term investors.
Another advantage of TR products is that, since you don't receive dividends in cash, you don't have to pay dividend income tax right away. But every gain comes with a tax eventually... Keep in mind that when you realize your profits later, a 15.4% holding-period tax will be applied.
PR (Price Return): Reflects Price Changes and Pays Cash
PR stands for Price Return. Only gains from stock price changes are reflected, and dividends are paid out separately. The ETF price is determined by rises and falls in the stock price, and you receive dividends in cash at each payout period.
PR is the most common type of ETF. If there's nothing attached to the end of the name, you can assume it's a PR product. Because it's clean with no extra options, fees tend to be somewhat lower. However, since it pays dividends, a 15.4% dividend income tax is charged each time.
H (Hedge): Protects Against Exchange Rate Risk
H stands for Hedge. In other words, it's a product that protects against exchange rate risk. When you invest in an ETF made up of overseas stocks, your returns can change as exchange rates move. With the H option, you can be free from this kind of currency risk.
However, currency hedging comes with a small additional fee. So if you invest over a very long period, the fee burden can grow a bit larger. Also, H products are advantageous when exchange rates swing a lot, but when rates are stable, you may end up just paying unnecessary extra fees.
Wrapping Up
Now that you know the differences between TR, PR, and H, you'll be able to choose the approach that suits you best when investing in ETFs. I wish you plenty of profits as always. Here's one more summary in a table. Thank you! π
| Type | Feature | Pros | Cons |
|---|---|---|---|
| TR (Total Return) | Automatic dividend reinvestment | Compounding, tax deferral | 15.4% tax charged when profits are realized |
| PR (Price Return) | Reflects price changes + cash dividends | Receive both price gains and cash dividends | Dividend income tax charged immediately |
| H (Hedge) | Protects against exchange rate risk | Minimizes currency risk | Additional fees due to hedging costs |
