Market's Surge Means Investors Need To Start Thinking About Tax Aspects Of Fund Investing
There are several ways fund investors can begin taking taxes into account, says Christine Benz, Morningstar's director of personal finance. Bond-fund investors can shift assets toward tax-free municipal bonds, for example.
“Index funds and exchange-traded funds that track broad market segments also tend to be naturally tax-efficient and are therefore good bets for investors looking to limit capital gains distributions from the holdings in their taxable accounts,” she writes.
Benz also identified some high-performing tax-managed funds, naming Vanguards’ suite of tax-managed funds her favorite.
For investors who are looking for tax-managed funds in the mid-cap category she singled out Buffalo Mid-Cap (BUFMX), and for those seeking a contrarian strategy she recommends Primecap Odyssey Stock (POSKX).