Wednesday, October 05, 2005

Fund Distributions to be largest since 2000 
The Wall Street Journal is reporting that mutual fund companies are expected to be making their largest capital gains distributions since the year 2000, the year the stock market bubble popped.

I take that as a moderately bearish sign, because it tells me that institutional investors have taken some substantial profits off the table, already. In short, the smart money has been doing some selling.

It's somewhat offset by the fact that fund companies have been offsetting gains with previous losses thus far, and have simply run out of losses.

Investors: If you have some money to sock away, consider waiting until AFTER an actively managed fund makes its taxable distribution for this year. (An index fund probably won't have the turnover to generate significant capital gains taxes, unless for some reason it gets hit with massive redemptions, forcing it to sell shares at a profit)

That way, you won't be put in the position of perversely having to pay taxes on other peoples' gains.

Splash, out


Unless, of course, you're in a tax-favored account, in which case it don't matter.
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