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Stock Funds That May Buffer a Fiscal Cliff Dive

These domestic-equity funds feature below-average tax-cost ratios and risk ratings.

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Investors are keeping a watchful eye on fiscal cliff negotiations in Washington, and with good reason. After all, the Congressional Budget Office projects that if tax rates do rise and federal spending is cut, as is scheduled to happen Jan. 1, it would plunge the economy back into recession in 2013. 

There's no way to know what's going to happen, of course, but changes scheduled to go into effect include an increase in long-term capital gains rates, from the current 15% top rate to 20%, while dividends would go from the current 15% rate to being taxed at ordinary income rates.

Adam Zoll does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.