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Tax-Efficient Asset Management: Evidence from Equity Mutual Funds

51 Pages Posted: 18 Dec 2013 Last revised: 23 Aug 2016

Clemens Sialm

University of Texas at Austin - McCombs School of Business; National Bureau of Economic Research (NBER)

Hanjiang Zhang

Nanyang Technological University - Nanyang Business School

Multiple version iconThere are 2 versions of this paper

Date Written: August 21, 2016

Abstract

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

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

Clemens Sialm (Contact Author)

University of Texas at Austin - McCombs School of Business ( email )

Austin, TX 78712
United States

HOME PAGE: http://faculty.mccombs.utexas.edu/Clemens.Sialm/

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Hanjiang Zhang

Nanyang Technological University - Nanyang Business School ( email )

S3-B1A-05 Nanyang Avenue
Singapore, 639798
Singapore

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