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Go-Go Growth Funds to Pay Big Capital Gains

Investors at Janus, PBHG, and American Century could feel tax bite.

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Some aggressive growth funds at Pilgrim Baxter, American Century Investments, and Janus Capital made investors happy last year with triple-digit returns. This year some of those funds could make Uncle Sam happy by making big income and capital-gains distributions.

If shareholders don't hold these funds in tax-deferred accounts, such as Individual Retirement Accounts and 401(k) plans, they could end up paying taxes on the distributions that, in some cases, could amount to between 25% or 30% of the fund's net asset values.

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