If you sell your shares of a mutual fund at a profit you have a capital gain. Just as with any other security.
But the fund itself might sell some of its portfolio at a profit. In such case the capital gain is passed on to you, even though you are still holding your fund shares. And even if the price of your fund went down for the year and you sold nothing, you still owe capital gains on the fund’s portfolio transaction.
That is why I advise never to buy a fund just before it is to report a dividend, especially a capital gains dividend.
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