A Year-End Run For Mutual Funds

Do all funds carry the same tax bite?

Compare that to Fidelity Magellan (ticker: GMAGX; 800-5448888), one of the most popular funds around, which doled out $5.21 for a $95 share in 1997 (down from $12.85 in 1996, when shares were valued at $80 each). Remember, too, that a number of financial companies run index funds besides Vanguard.

In addition, a number of mutual fund companies offer tax-managed funds. Tax-managed funds strive to keep turnover to a minimum and therefore keep a lid on capital gains distributions. in other words, they mimic a lot of the strategies index funds have made successful. Morningstar’s Cooley says one of the best tax-managed funds that carries no sales load is Vanguard’s Tax Managed Growth and Income Fund (ticker: VTGIX), which has averaged an annual total return of 28.39% over the last three years. Last year, it held turnover to a scant 2%, and had no capital gains distribution.

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