Nov 10, 2021
Every year mutual funds are required to distribute capital gains to shareholders – whether you like it or not. Even though “gains” are typically a good thing, they can also leave you with a big unwanted tax bill. This week we cover everything you need to know about mutual fund capital gains distributions, including how to forecast, plan for, and avoid them.
[02:35] Important Period – Grant starts the discussion by mentioning the parties that need to stay updated about mutual funds during this time of the year.
[05:45] Structure of Mutual Funds – Grant provides a broad description of the structure of mutual funds from various perspectives.
[11:16] Capital Gains Distribution – Keeping an eye on the company portfolio in the mutual fund is important as an investor. Grant shares his thoughts on how to benefit from capital gains distributions.
[14:12] Options for the Investors – Grant explains the numerous options that the investors have at the year-end related to mutual fund investments.
[16:45] Active Mutual Funds and Passive Mutual Funds – Grant analyzes the effect on the distributions of capital gains by active and passive mutual funds, giving numerical examples.
[19:48] Exchange Traded Fund – Capital gains distributions of exchange-traded funds are quite different from the above. Grant dives into exchange-traded funds explaining it with several examples.
Resources
Capital Gains Roundup: 2021 Edition | Strong performance and outflows generate some big taxable distributions: morningstar.com/articles/1065314/capital-gains-roundup-2021-edition
Fund Capital Gains Distributions: What to Expect in 2021 |A strong year suggests that a decent amount of capital gains will be paid out: morningstar.com/articles/1063488/fund-capital-gains-distributions-what-to-expect-in-2021