51 Pages Posted: 18 Dec 2013 Last revised: 23 Aug 2016
Date Written: 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.
Keywords: Dividend and Capital Gains Taxes, Mutual Fund Performance
JEL Classification: G18, G20, G23, H24
Suggested Citation: Suggested Citation
Sialm, Clemens and Zhang, Hanjiang, Tax-Efficient Asset Management: Evidence from Equity Mutual Funds (August 21, 2016). Available at SSRN: https://ssrn.com/abstract=2368625 or http://dx.doi.org/10.2139/ssrn.2368625