Bob Brinker's Marketimer

  Tuesday November 21, 2017

Next Marketimer © Mailing Date: November 6th


© 1997-2017
Privacy Policy

Hosted by:
@ ADPAD INC.




TAX AND EXPENSE ADVANTAGES OF INDEX FUNDS
Learn even more about this topic with the Encyclopedia of Personal Finance™

The holdings in an index fund are not traded often because they are held to match an index. Most index funds are passively managed. Managers of actively managed funds trade their securities more often. This results in capital gains and losses. When a fund has net capital gains, its shareholders must pay taxes on the capital gain distributions, even if they are reinvested. Most index funds have little capital gain distributions subject to tax. Some investors think of this characteristic as a tax advantage.

Since most index funds are managed passively, management expenses are lower compared to actively managed mutual funds. Two funds composed of the same securities will perform the same. However, the one with lower expenses has an advantage.

Now let's review what we've learned.




LEARN EVEN MORE WITH THE ENCYCLOPEDIA OF PERSONAL FINANCE. CLICK HERE!

Powered by


Copyright ©1999-2017, Precision Information, LLC. All Rights Reserved