Improving the Tax Efficiency of Mutual Funds: Exchange-Traded and Tax-Managed Funds

Posted: 7 Feb 2002

See all articles by Richard B. Toolson

Richard B. Toolson

Washington State University - School of Accounting, Information Systems, and Business Law

Abstract

The author deals with hard questions involving mutual funds: Why are they frequently a poor bet from a tax standpoint? Why do mutual funds sell appreciated equities? There are, however, tax-managed mutual funds that are structured to achieve tax efficiency. The author discusses how such efficiencies have been, and can be, achieved. Exchange-traded funds, with pricing changed continuously throughout the day, are traded like stocks, but what is their track record? How can exchange-traded funds maximize tax-efficiency? This article looks at the issues from the perspective of the investor, but contains valuable insights that should be incorporated into the decisions made by the managers of mutual and exchange-traded funds.

Suggested Citation

Toolson, Richard B., Improving the Tax Efficiency of Mutual Funds: Exchange-Traded and Tax-Managed Funds. Available at SSRN: https://ssrn.com/abstract=299544

Richard B. Toolson (Contact Author)

Washington State University - School of Accounting, Information Systems, and Business Law ( email )

College of Business & Economics
Pullman, WA 99164-4729
United States
509-335-2121 (Phone)

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