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Fund Spy

These Funds Are Set to Make Hefty Taxable Distributions

It looks to be a fairly quiet year for capital gains payouts, but a few funds stand out.

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It’s that time of year again, when mutual funds distribute taxable capital gains to shareholders. Some smaller firms have already made distributions, but most will pay their gains out in the last few weeks of December. If you’re considering buying a fund in a taxable account, you’ll want to keep an eye out for big upcoming distributions. It makes more sense to wait until after the payout occurs. Otherwise, you’ll face a tax bill for gains the fund enjoyed that you weren’t around to receive.

The good news is that after poring over the distribution estimates of roughly 1,000 mutual funds (including most of the largest U.S.-sold offerings), we can report that relatively few of them are making hefty distributions this year. We found no funds from Vanguard, T. Rowe Price, or American Funds, for example, that estimated they would make taxable distributions in December that were equal to or exceeded 10% of their net asset values as of Dec. 3, 2012. 

Greg Carlson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.