Mutual Fund Distribution Update

November 8, 2012

Note: This post was updated Friday November 9, 2012 to include Ariel’s estimated distributions.

November marks the start of mutual fund distribution season, the time of year when fund companies distribute capital gains and income to shareholders. Distributions affect investors with taxable accounts as distributions are taxable whether shareholders choose to reinvest them in new shares or take distributions in cash.

Few firms had estimate distribution information available as the November issue of NoLoad FundX was going to press, but we’ve continued to check on fund companies like Ariel, Baron, Leuthold and Parnassus that have historically made distributions in November. Here’s what we’ve found:

Parnassus (PARNX) is expected to distribute $2.71 per shares in long-term capital gains to shareholders on November 16th. (The record date is November 15th). PARNX is a hold in Class 2.

Baron recently posted estimates. Baron Asset (BARAX) and Baron Growth (BGRFX) are expected to make large long-term capital gains distributions ($3.75 and $5.50 per share, respectively) on November 28th. BARAX is a sell this month, and BGRFX is a hold. Baron Small Cap (BSCFX) and Baron Opportunity (BIOPX), both ranked as sells this month, are also expecting to distribute long-term capital gains of $0.85 and $0.25 per share, respectively.

Ariel posted estimated distribution information. Ariel Appreciation (CAAPX) is the only Ariel fund expected to distribute capital gains this year. CAAPX’s estimated distribution is $4.46 in long-term capital gains and $0.02 in short-term capital gains on November 16. This distribution represents roughly 10% of the Fund’s November 8, 2012 NAV. (Ariel Funds make income distributions in December).

We spoke with representatives at Leuthold Funds, but the firm did not have estimates available yet.

Estimates are often posted on a fund’s website, but it can be worth calling a fund company this time to year to avoid buying into a fund right before it’s about to make a taxable distribution.

Among funds that were highly ranked this month, only a handful of companies had estimates available:

  • Dodge & Cox (pdf) – Class 3’s Dodge & Cox Stock Fund (DODGX) is not expected to distribute capital gains this year.
  • Harbor (pdf)  – Class 3’s Harbor Large-cap Value (HILVX) is expected to make a small income distribution in December.
  • Vanguard expects to have estimates available November 15.
  • Weitz Funds – Class 2’s Weitz Parner Value (WPVLX) is not expected to make any distributions this year.

We publish estimated distribution information for all of the funds in NoLoad FundX in the December issue and include final distributions in January.

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