Mutual Fund Tax Clienteles
University of Texas at Austin - McCombs School of Business; National Bureau of Economic Research (NBER)
Laura T. Starks
University of Texas at Austin - Department of Finance
December 7, 2011
The Journal of Finance, Forthcoming
McCombs Research Paper Series No. FIN-01-10
AFA 2011 Denver Meetings Paper
Mutual funds are held by investors in taxable and tax-qualified retirement accounts. We investigate whether the characteristics, investment strategies, and performance of mutual funds held by these diverse tax clienteles differ. Examining both mutual fund distributions and mutual fund holdings, we find that funds held primarily by taxable investors tend to choose investment strategies that result in lower tax burdens than funds held primarily in tax-qualified accounts. Despite these differences, we find no evidence that any investment constraints that may arise from these tax-efficient investment strategies result in performance differences between funds held by different tax clienteles.
Number of Pages in PDF File: 46
Keywords: Mutual Funds, Tax Management, Retirement Accounts
JEL Classification: G11, G12, G23, G35, H24
Date posted: March 12, 2010 ; Last revised: January 10, 2012
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