Mutual Funds

Five Reasons to Love Bond Funds

February 14, 2013

Returns on bonds have been strong for the past couple of years. Bonds have done well in an environment marked by high demand, low interest rates and low levels of defaults, but we know that markets change. Investors may not always have such a strong demand for bonds; interest rates may rise, and defaults may [...]

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Sell Now to Avoid Higher Tax Rates?

December 11, 2012

Some subscribers have wondered if they should sell fund shares to realize gains before the end of the year because taxes may be higher in 2013. We believe there is little or no advantage to making portfolio changes based on predictions about where taxes will be next year. Instead, it’s more important to follow the [...]

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Year-End Distribution Guide

December 4, 2012

Many mutual funds distribute capital gains and income to shareholders at or near year-end. Unless you’re investing in a tax-deferred account, these distributions are taxable to you. To help you better understand distributions, we compiled a three-page Guide to Year-End Distributions. In the Guide to Year End Distributions, you’ll learn: Why funds make capital gains [...]

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How Bond Funds Make Distributions

November 29, 2012

When a stock mutual fund makes a year-end distribution of capital gains and income, the fund’s share price drops by the amount of the distribution. But many bond funds distribute income to shareholders on a monthly or quarterly basis, and in this case, the bond fund’s share price does not drop by the amount of [...]

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Distributions are Part of a Fund’s Net Asset Value

November 27, 2012

Some investors think that a fund’s distribution offers a guaranteed gain, but distributions are just part of the fund’s net asset value (NAV). We’ve been using Parnassus (PARNX) as a distribution example, so let’s consider an investor who owned roughly $10,000 in PARNX when the fund distributed $2.73 per share of long-term capital gains earlier [...]

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Tax Tactics for Mutual Fund Distributions

November 15, 2012

Earlier this week, we explained that it is rarely worth selling a fund to avoid a long-term distribution — that’s why we’d continue holding Class 2 Parnassus (PARNX), despite that PARNX is expected to make a large (6.5%) distribution of long-term capital gains on November 16. Today, we show why some investors might consider selling [...]

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Parnassus Announces Big Distributions – What to Do?

November 13, 2012

Parnassus (PARNX) is expecting to make a sizeable capital gain distribution next week that could affect investors who recently bought into the Class 2 fund. PARNX is expected to distribute $2.71 long-term capital gains (6.5% of the fund’s NAV as of November 7, 2012) on November 16. If you own PARNX funds in a taxable [...]

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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 [...]

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Navigating Vanguard’s Share Classes

October 25, 2012

Vanguard’s different share classes give investors many ways to access a fund. We tend to cover Vanguard ETFs in NoLoad FundX because they are available to most investors. But some investors don’t want to trade ETFs, and other investors may not have access to Vanguard ETFs in their retirement plans. Not all Vanguard funds are [...]

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