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Not sure why a industry publication is effectively throwing a large part of its industry under the bus. Instead of arguing for treating all mutual/etf's REITS

Not sure why a industry publication is effectively throwing a large part of its industry under the bus. Instead of arguing for treating all mutual/etf's REITS and investment companies in are more sane way - the way the UK does with IT, OIECS and ETF's - that is the individual owning the shares pays the tax.

oarsinsync 8y ago
In the case of mutual funds, the individual investors are all subject to capital gains (or losses) whenever the fund sells any shares. Even if the investor hasn’t divested any money from the fund. This loophole now results in investors only being subject to taxation when they actually sell their stake in the fund. IE the same way as how ETFs are designed to work. Alternatives result in double taxation, which means it’s the investor that pays twice anyway - the fund will just add the costs of being taxed itself into the value of the fund, and then the investor will pay a second time when they divest from the fund.
- mcherm 8y ago
  > This loophole now results in investors only being subject to taxation when they actually sell their stake in the fund. IE the same way as how ETFs are designed to work. Your phrasing is slightly misleading. The only reason under tax law that EFTs are taxed this way is because EFTs have always used this same tax dodge. So it's not as if Vanguard has patented (and used) a legal loophole for getting EFT tax treatment on a mutual fund, it is that Vanguard has patented (and used) the same loophole for their mutual fund that everyone uses for their EFTs.
  - C1sc0cat 8y ago
    Not really a tax dodge its the way investment trusts have worked for over a hundred years - and they helped build America :-)
anonu 8y ago
This is the news media trying to be sensationalist. Vanguard is mutualized... Ultimately this means ETFs and mutual funds assets are part of the same pool. You can argue that they would be violating their fiduciary duty if they didn't do something like this, which is completely legal and above board, and saves their investors billions every year.

oarsinsync 8y ago

In the case of mutual funds, the individual investors are all subject to capital gains (or losses) whenever the fund sells any shares. Even if the investor hasn’t divested any money from the fund. This loophole now results in investors only being subject to taxation when they actually sell their stake in the fund. IE the same way as how ETFs are designed to work. Alternatives result in double taxation, which means it’s the investor that pays twice anyway - the fund will just add the costs of being taxed itself into the value of the fund, and then the investor will pay a second time when they divest from the fund.

mcherm 8y ago
> This loophole now results in investors only being subject to taxation when they actually sell their stake in the fund. IE the same way as how ETFs are designed to work. Your phrasing is slightly misleading. The only reason under tax law that EFTs are taxed this way is because EFTs have always used this same tax dodge. So it's not as if Vanguard has patented (and used) a legal loophole for getting EFT tax treatment on a mutual fund, it is that Vanguard has patented (and used) the same loophole for their mutual fund that everyone uses for their EFTs.
- C1sc0cat 8y ago
  Not really a tax dodge its the way investment trusts have worked for over a hundred years - and they helped build America :-)

anonu 8y ago

This is the news media trying to be sensationalist. Vanguard is mutualized... Ultimately this means ETFs and mutual funds assets are part of the same pool. You can argue that they would be violating their fiduciary duty if they didn't do something like this, which is completely legal and above board, and saves their investors billions every year.