tax-efficient fund

Tax-Efficient Fund

A mutual fund that invests in securities thought to give fund shareholders the least possible tax liability. Common securities in which a tax-efficient fund invests are municipal bonds, which are usually tax-free, and non-dividend paying stocks, which reduce a shareholder's capital gains tax liability. Tax-efficient funds often retain stocks in which they invest, as stocks held for more than a year are taxed at a lower capital gains rate. They are often thought of as an alternative to tax-deferred investment vehicles, such as 401(k)s and IRAs.

tax-efficient fund

A mutual fund that manages its investment portfolio so as to minimize the tax liability of its shareholders. A tax-efficient fund attempts to minimize capital gains distributions by reducing portfolio turnover and to minimize dividend payments to shareholders by concentrating on investments in companies with low dividend payouts.
References in periodicals archive ?
Pensions should also not be ignored in terms of both building up a tax-efficient fund and passing on wealth free of IHT (assuming that you do not need to take an income from the fund, which is a whole new area of wealth planning).
The disclosure is not required to appear in advertising unless the fund is presented as a tax-efficient fund.
Like most index funds (especially Vanguard index funds), it is a low-cost, tax-efficient fund because the managers do relatively little trading.
A tax-efficient fund has more long-term capital gains and less investment income and short-term gains.
Our long-term perspective and low turnover should help us remain a tax-efficient fund, which will help our clients come April 15th," says Michael Cohen, co-manager of the fund.
In addition, the firm's Dalton Advisors division offers institutional and private clients investment strategies using low-cost, tax-efficient funds to structure customized portfolios in separately managed accounts.
Tax-efficient funds aim to minimize the distributions that are made to shareholders, thereby limiting the amount of income that must be declared.
Tax-efficient funds: Tax-efficient funds (such as index funds) are excellent long-term savings vehicles due to their low turnover, which reduces capital gains distributed over the investment's life.
Appropriate solutions for HNW individuals and small-business clients will be driven by asset allocation, risk management, consolidated statements and some alternative investment classes such as real estate and tax-efficient funds.
This makes the mote tax-efficient funds the most appealing.
Dalton Advisors' investment strategy uses low-cost, tax-efficient funds to structure customized portfolios in separately managed accounts.
Investors may be able to reduce their tax bill and increase their after-tax return by investing in tax-exempt funds, such as municipal bond funds, in their taxable accounts, or consider investing in tax-efficient funds, such as index and tax-managed funds.