Capital gains distributions

The capital gains distributions lower the value of the fund. A mutual fund with long-term capital gains can designate a portion of its dividend as a capital gain distribution.

Capital Gains Distributions " The price of the securities a fund owns may increase. When a fund sells a security that has increased in price, the fund has a capital gain.

Case Study Capital gains distributions can produce unexpected tax problems for mutual fund shareholders, especially investors who acquire mutual fund shares following a major increase in stock values.

If a company in which you own stock offers a DRIP, you have the opportunity to reinvest cash dividends and capital gains distributions in more stock automatically each time they are paid.

When calculating your basis after selling a mutual fund, it's easy to forget to factor in the dividends and capital gains distributions you reinvested in the fund. The IRS considers these distributions as taxable earnings in the year they are made.

Such features as automatic reinvestment of dividends and capital gains distributions, programs for regular additional investments and for systematic withdrawals, ...

Very often index mutual funds and ETFs are required to make yearly income and capital gains distributions to fund holders which are taxable.

Dividend reinvestment plan (DRIP) A plan that allows stockholders to automatically reinvest cash dividends and capital gains distributions. This lets them purchase additional stock on a regular basis without incurring commissions.

Cents per share
The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned.
Checkwriting
Free checkwriting privileges offered with nonretirement accounts for select mutual funds.

The amount of a mutual fund`s Dividend or Capital gains Distributions that a Shareholder will receive for each share owned.

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Payments to mutual fund shareholders of profits from the sale of securities in a fund's portfolio. Capital gains distributions (if any) are usually made annually.
Capital Turnover
Annual total Revenue as a percentage of total assets.

Automatic Reinvestment: An option available to stock and mutual fund investors where fund dividends and capital gains distributions are automatically reinvested to buy additional shares and thereby increase holdings.
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High turnover funds can lead to large capital gains distributions and tax inefficiency. If you aren't careful, management expenses, and capital gains taxes can shave hundreds " if not thousands " of dollars from your returns over the years.

Definition
Investment income
Includes taxable and tax-exempt interest, dividends, capital gains distributions, and rental income.
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High portfolio turnover can mean high expenses associated with all that trading, as well as higher capital gains distributions. High turnover can also mean a high level of speculation and a short-term orientation on the part of fund management.

SPDR S&P Biotech carries an expense ratio of 0.35 percent, making it one of the cheapest biotech-focused ETFs on the market. With no capital gains distributions in its history, the fund is also extremely tax-efficient.

Capital Gains Distribution Payments to mutual fund shareholders of profits from the sale of securities in a fund's portfolio. Capital gains distributions (if any) are usually made annually.

Automatic Reinvestment: A shareholder-authorized purchase of additional fund shares using dividend distributions or capital gains distributions.

Reinvestment
Use of investment income to buy additional securities. Many mutual fund companies and investment services offer the automatic reinvestment of dividends and capital gains distributions as an option investors.

Because I look at so many charts I knew instantly that this was a distribution and not some calamity. It is best to call the fund to verify this. Most funds that make dividend and capital gains distributions usually do so in December, ...

Automatic Investment Plan
See Systematic Accumulation Plan.
Automatic Reinvestment
An option permitting mutual fund shareholders to purchase additional shares by using fund dividend and/or capital gains distributions.

Of course, they're competing for your investment dollar, so you should expect squabbles. Still, according to published reports, the Barclays iShares S&P 500 ETF made capital gains distributions while the Vanguard 500 mutual fund did not.

See also: Capital Gain, Capital gains, Distributions, Distribution, Capital