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Fund Spy

Tax Bills for Fundholders on the Rise

Capital gains payouts soared in 2007.


You may be in the red for 2008, but you probably will be paying capital gains taxes come April. Capital gains payouts in 2007 rose for the fourth straight year.

For 2007, the average U.S. equity fund paid out 6.89% of year-end net asset value. That compares with 4.17% of assets in 2006, 3.32% in 2005, and 1.67% in 2004. For international equity, the average payout grew to 7.49% compared with 4.98% in 2006. For balanced funds the payout jumped to 3.0% from 1.95%. For taxable-bond funds, the payout rose to 0.20% from 0.12%. (The main tax bill for holders of taxable bonds and bond funds is on the income, which is taxed at a higher rate than long-term capital gains.)

In terms of how many funds made a payout of any kind, the figure was 75% for U.S. equity, 83% for foreign equity, and 83% for balanced.

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Russel Kinnel does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.