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Capital Gains in Mutual Funds: Do You Understand Them?


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Many investors do not understand how capital gains work in mutual funds. This is something every investor needs to know before getting involved in a mutual fund.

Published in: Economy & Finance, Business
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Capital Gains in Mutual Funds: Do You Understand Them?

  1. 1. Mullooly Asset Management PodcastMay 1, 2013Mullooly Asset Management May 2013
  2. 2. Distributions from Mutual FundsIncomeDividends from holdingsShort term capital gainsLong term capital gainsMullooly Asset Management May 2013
  3. 3. Capital Gains VarySuppose the mutual fund invested in IBM in 1994, butdid not sell it until 2013You pay all the capital gain for twenty years, eventhough youve been in the fund for far shorter periodMullooly Asset Management May 2013
  4. 4. Capital Gains VarySuppose you MANAGE a mutual fundYou have small large holdings that trade each daywith lots of volumeYou also own other stocks that do not trade veryoftenWhen a large number of sale requests come in, whichdo you sell first?Mullooly Asset Management May 2013
  5. 5. What About Capital Losses?Not in mutual funds (carried over instead)Mullooly Asset Management May 2013
  6. 6. Exchange Traded FundsDistributions from ETF’s:- Income- Dividends- Gain or loss on the investments- Gain or loss may be short or long termMullooly Asset Management May 2013
  7. 7. None of the securities mentioned in this (or any) podcast orvideo represent past specific recommendations of MulloolyAsset Management.This video is NOT a recommendation to buy or sell any ofthe securities mentioned here.If you’re relying on a podcast for investment advice, you arelikely making a huge mistake.We strongly urge our listeners to consult with theirinvestment advisor before they make a decision to buy orsell any investment.Mullooly Asset Management May 2013
  8. 8. Mullooly Asset Management, LLCsupport (at) mullooly (dot) net732-223-9000www.mullooly.netMullooly Asset Management May 2013