Tax-Managed Funds

Index funds are tax efficient by their very nature. However, some indexes can be further tax-managed to save you even more in taxes. These tax-managed index funds are very efficient in offsetting realized gains with realized losses, deferring the realization of net capital gains and minimizing the receipt of dividend income. The result is maximized unrealized capital gains that have not yet been realized for tax purposes. Taxes are not paid until a future date when withdrawals are made and the gains then become realized. The benefit is that the unrealized capital gains (profits) remain a growing part of the net asset value of a fund rather than being distributed to the investor.

Step 7tax-managedindex fundsefficientdividend incomeunrealized capital gains