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Not true. Every year, a mutual fund is required to distribute an amount equal to the capital gains realized by the fund in that year. For a mutual fund that tra
by URSpider94 8y ago
Not true. Every year, a mutual fund is required to distribute an amount equal to the capital gains realized by the fund in that year. For a mutual fund that trades actively, that could be a sizeable fraction of the amount you have invested. This is cap gains, not a dividend. Stocks and ETF’s don’t do that. https://www.investopedia.com/terms/c/capitalgainsdistribution.asp https://www.investopedia.com/terms/c/capitalgainsdistributio...
- icedchai 8y agoGood to know! My funds generate relatively small capital gains distributions (most of what I see on my 1099's is from dividends) so I never noticed it. Edit: Though now that you mention it, I think I must've known this at some point in the past: that ETFs had preferential tax treatment. A while back, I moved my most recent investments to ETFs, even for the "same" fund (example: Vanguard Tech VITAX mutual fund vs VGT ETF) ... Still, how are ETFs treated differently from a stock?