本文发表在 rolia.net 枫下论坛The Securities and Exchange Commission (SEC) is now requiring mutual funds to report their returns on an after-tax basis. It's vital information for mutual fund investors, since taxes shave an estimated 2.5 percentage points off the average mutual fund's annual return, if it is held in a taxable account (according to a KPMG study). If your mutual fund has been beating the market average by 1 percentage point each year, you may be actually losing to the market, once you factor in taxes.
Many mutual fund managers buy and sell various securities frequently. This is called "turnover." Holdings sold at a profit result in capital gains that shareholders are responsible for (if they hold the shares in a taxable account). The short-term gains are taxed at regular income tax rates, which can be nearly 40 percent, and long-term gains are taxed at 20 percent (10 percent for those in the lowest tax bracket).
Imagine that you hold 10 shares of the Blundermann Growth fund in a taxable account at $100 per share (total investment: $1,000). The fund realized $5 per share of gains last year and credits you with $50 in capital gains, lowering the value of your shares to $950. The fund then reinvests the $50 in new shares, leaving you with 10.53 shares worth $95 each, for a total value of $1,000. You've broken even, but you have to pay taxes this year on that $50 distribution.
High turnover in a mutual fund has real costs to shareholders. Until now, however, mutual funds did not suffer from the tax consequences of their moves. With no incentive to restrain any turnover tendencies, average turnover increased from 33 percent in 1975 to 73 percent in 1994 to more than 100 percent today.
Mutual funds' prospectuses now have to include annual results on an after-tax basis. Funds must offer this data in their prospectuses, but needn't do so in their sales and marketing materials. It's smart to learn as much as you can about a fund before investing by reading its prospectus and not just misleading ads.更多精彩文章及讨论，请光临枫下论坛 rolia.net
Many mutual fund managers buy and sell various securities frequently. This is called "turnover." Holdings sold at a profit result in capital gains that shareholders are responsible for (if they hold the shares in a taxable account). The short-term gains are taxed at regular income tax rates, which can be nearly 40 percent, and long-term gains are taxed at 20 percent (10 percent for those in the lowest tax bracket).
Imagine that you hold 10 shares of the Blundermann Growth fund in a taxable account at $100 per share (total investment: $1,000). The fund realized $5 per share of gains last year and credits you with $50 in capital gains, lowering the value of your shares to $950. The fund then reinvests the $50 in new shares, leaving you with 10.53 shares worth $95 each, for a total value of $1,000. You've broken even, but you have to pay taxes this year on that $50 distribution.
High turnover in a mutual fund has real costs to shareholders. Until now, however, mutual funds did not suffer from the tax consequences of their moves. With no incentive to restrain any turnover tendencies, average turnover increased from 33 percent in 1975 to 73 percent in 1994 to more than 100 percent today.
Mutual funds' prospectuses now have to include annual results on an after-tax basis. Funds must offer this data in their prospectuses, but needn't do so in their sales and marketing materials. It's smart to learn as much as you can about a fund before investing by reading its prospectus and not just misleading ads.更多精彩文章及讨论，请光临枫下论坛 rolia.net