Tax-Efficient Asset Management: Evidence from Equity Mutual Funds
University of Texas at Austin - McCombs School of Business; National Bureau of Economic Research (NBER)
Nanyang Technological University - Nanyang Business School
August 21, 2016
Investment taxes have a substantial impact on the performance of taxable mutual fund investors. Mutual funds can reduce the tax burdens of their shareholders by deferring the realization of capital gains and by accelerating the realization of capital losses. Such tax avoidance strategies constrain the investment opportunities of the funds and might reduce their before-tax performance. In contrast, we find that tax-efficient equity funds do not just reduce the tax burdens of their investors, they also exhibit lower trading costs, favorable style exposures, and superior selectivity.
Number of Pages in PDF File: 51
Keywords: Dividend and Capital Gains Taxes, Mutual Fund Performance
JEL Classification: G18, G20, G23, H24
Date posted: December 18, 2013 ; Last revised: August 23, 2016
© 2016 Social Science Electronic Publishing, Inc. All Rights Reserved.
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