How Tax-Efficient Is Your Mutual Fund?
A few basic metrics can guide you.
Note: This article is part of Morningstar's February 2014 Tax Relief Week special report. An earlier version of this article appeared March 16, 2011.
Tax frenzy may reach a fever pitch in April, but it's a mistake to only consider your tax bill around tax time. Whether you're just starting out or are a longtime investor looking to make changes to your portfolio, understanding a fund's tax efficiency can mean more money in your pocket in the long run. Below we'll take a look at some basic metrics that will help you gauge how tax-friendly a fund is.