tax-managed mutual fund
Tax-Managed Mutual Fund
A mutual fund that invests in securities thought to have given fund shareholders the least possible tax liability. Common securities in which a tax-managed 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-managed funds often hold on to 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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
tax-managed mutual fund
A mutual fund that is managed so as to maximize the aftertax return rather than the pretax return of its shareholders. Capital gains distributions are minimized by low portfolio turnover and an attempt by the portfolio manager to offset realized gains with realized losses.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.