Mutual Funds to Harvest Last Year’s Losses to Offset Capital Gains
November 30, 2009
The steep losses that mutual funds experienced last year will come in handy this year as funds outside of qualified accounts look to offset capital gains, according to a recent Morningstar report. In fact, funds have up to eight years to harvest losses, which will make them tax-efficient for years to come.
Equity funds are more likely to take advantage of losses than bond funds, which did not experience the steep downturn of stocks in 2008. Thus, bond funds are more likely to pay distributions this year.
In fact, Dodge & Cox Funds and Longleaf Partners Funds don’t expect to pay capital-gains distributions this year, and Fidelity, T. Rowe Price and Osterweis Capital have said they expect minimal distributions.
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