Tax Managed Equity Funds and Tax Inefficiency

Posted: 27 Feb 2021

See all articles by Derek Horstmeyer

Derek Horstmeyer

George Mason University - Department of Finance

Date Written: December 23, 2020

Abstract

A lot of ETFs and mutual funds have come on the scene in the last 5 years with the label 'Tax Efficient' or 'Tax Managed'. But on a post-tax basis are these funds worth the higher fees? We look at each tax managed fund and compare it to its non-tax managed counterpart -- yielding 102 funds in total. We find weak improvements in post tax returns (greatest on a percentage basis for long duration funds). For most equity classes these marginal improvements in post-tax returns don't seem to be worth the higher fees.

Suggested Citation

Horstmeyer, Derek, Tax Managed Equity Funds and Tax Inefficiency (December 23, 2020). Available at SSRN: https://ssrn.com/abstract=3754619

Derek Horstmeyer (Contact Author)

George Mason University - Department of Finance ( email )

Fairfax, VA 22030
United States

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