Now is the time to start preparing for mutual fund year-end distributions.
Nearly all stock funds distribute capital gains and income to shareholders at the end of the year, and if you own funds in a taxable account, these distributions are taxable to you whether you take them in cash or reinvest them in new shares.
What to do now
If you own funds in a taxable account: Trade carefully this time of year. Before buying a fund, check to see if it plans to make a distribution.
We’ve provided links to the estimated distribution information for many major fund companies below to help. (If you’re a reader of NoLoad FundX, you’ll get complete distribution information in the December issue.)
You also may opt to buy ETFs since most ETFs don’t pay out capital gains, and most distribute income quarterly.
If you invest in a tax-deferred account like an IRA or 401(k) then you don’t need to worry about the tax implications of distributions, but you should still be aware of them when looking at a fund’s performance.
A fund’s NAV or share price drops by the amount of the fund’s distribution. This can look like a fund has sold off sharply when, in fact, the fund simply distributed some assets to its shareholders. Returns in NoLoad FundX are adjusted for distributions, but reporting services like Yahoo Finance don’t always factor in a fund’s distributions, so it may look like your fund has lost money when it really hasn’t.
Estimated 2016 Year-end Distributions
Click each fund company below to learn more about what funds are expected to make year-end distributions and when these distributions will be paid.
Dodge and Cox (pdf)
Setting aside some time now to make your year-end plans can give you more peace of mind during the busy holiday season, and it can really help you start the New Year off on the right foot.