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Attention Mutual-Fund Investors

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Did you know that you have to pay taxes—like, all of them—on your mutual fund returns even when they suck? In fact, especially when they suck, but not badly enough? Well...

When they sell their holdings, mutual funds have to pay out any profits as taxable capital gains unless they can offset them against losses. After nearly six years of a raging bull market, most funds have no big losses left.

So, even after underperforming the market badly this year, funds are doling out startlingly big tax bills for their investors.

Of course, you always have recourse to the old-fashioned way of dealing with a mutual fund that’s pissed you off. Like, say, the “hedge-like” MainStay Marketfield, which would have been a great hedge this year if you wanted to cancel out all of those other mediocre returns you were earning in your other investments. Which, it turns out, most people do not want to do.

Assets in the MainStay Marketfield fund have fallen 45% from a February peak of $21.5 billion….

The fund lost 12.4% this year through Dec. 24, compared with a gain of 14.9% for its benchmark, the S&P 500 index….

“It’s just been a terrible year,” said MainStay Marketfield manager Michael Aronstein. “My performance has been horrendous.”

When Funds Insult Their Investors [WSJ MoneyBeat blog]
Hot Fund Takes Wrong Turn [WSJ]


Attention Paulson Investors/Harvard University

May performance was pretty, pretty, pretty good.

By Singhaniket255 (Own work) [CC BY-SA 4.0], via Wikimedia Commons

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