Drag on Gross Returns

November 2002
Journal of Financial Planning;Nov2002, Vol. 15 Issue 11, p29
Academic Journal
This article provides information on a white paper by Lipper which states that high-tax-bracket investors in stock mutual funds have lost one-third of their gross returns over the past decade to expenses, loads and federal taxes, as of November 2002. Lipper said taxable diversified equity funds in the U.S. returned an average of 12.7 percent for the last decade. Expenses and loads reduced it to 11.2 percent, and taxes dropped the return to 8.6 percent for investors in the highest tax bracket. The Lipper study also found that, despite this obvious drag of taxes on returns, investment in tax-managed funds remains small. Lipper said that many tax-efficient funds outperform tax-inefficient funds and it also found that low turnover is not necessarily the best gauge for identifying tax-efficient funds versus higher turnover funds.


Related Articles

  • Return-enhancing strategies with international ETFs: Exploiting the turn-of-the-month effect. Haiwei Chen; Sang Heon Shin; Xu Sun // Financial Services Review;Fall2015, Vol. 24 Issue 3, p271 

    We show that the average return over the four-day period surrounding the turn of the month is significantly positive in eight out of the nine international exchange-traded funds (ETFs). The strategy of buying-and-holding an ETF during tum-of-the-month (TOM) period and switching to holding...

  • Controlling investment costs will help increase investment returns. Thompson // Business Journal Serving Fresno & the Central San Joaquin Valley;09/06/99, Issue 322508, p7 

    Asserts that investors should make an effort to understand, quantify and reduce investment costs as these will lead to higher investment returns. Reasons on why investors pay little attention to costs; Type of investment costs; Tips on how to reduce an investor's investment costs.

  • How Have Investors Used Our Picks? Carlson, Greg // Morningstar FundInvestor;Jan2007, Vol. 15 Issue 5, p18 

    The article offers information on the funds that have performed notable investor returns or asset-weighted returns. The large-value fund T. Rowe Price Equity Income run by Brian Rogers invested in staid blue chips, which investors enjoyed slightly better returns than the fund's official returns....

  • The 'low volatility anomaly. McCormick, Dominic // Money Management;4/25/2013, Vol. 27 Issue 15, p18 

    The article offers the author's insights on the anomaly of low volatity funds to investment returns. The author discusses several possible explanations of the anomaly including investors who chase volatile stocks, overconfidence and setting focus on benchmarking to traditional indexes. He...

  • Millionaire Investors Send Mixed Signals in December.  // Spectrem High Net Worth Advisor Insights;Jan2013, Vol. 9 Issue 1, p6 

    The article focuses on the investment preferences of millionaire investors based on the Spectrem's index for December 2012. It mentions that it is more probable for investors to remain on the sidelines rather than investing. It states that stock mutual funds are still stagnant in December while...

  • Where are UK equity income returns coming from? Watt, Gregor // Money Marketing (Online Edition);2/7/2013, p32 

    The article discusses the dividend growth of UK equity income in 2012 which is expected to slowdown in 2013. It cites the data from the Investment Management Association which indicate that equity income was the best-selling sector in November 2012 surpassing the growth of fixed income. Equity...

  • Japan demand drives equity fund inflows to 14-week high, says EPFR Global. Jackson, Gary // Fundweb;5/20/2013, p4 

    The article offers information on the impact of return of investors to Japan to boost equity funds to outsell bond portfolios. It states that overall flows to equity funds reached 14.6 billion pounds till May 15, 2013 compared with the 3.4 billion pounds gain seen in bond portfolios. It mentions...

  • 'Benchmarking' the benchmarks: How do risk-adjusted returns of Australian mutual funds and indexes measure up? Costa, Bruce A; Jakob, Keith; Niblock, Scott J; Sinnewe, Elisabeth // Journal of Asset Management;Nov2015, Vol. 16 Issue 6, p386 

    The primary aim of this study is to investigate whether equity fund managers are selecting appropriate self-nominated benchmark indexes for their funds. Specifically, we examine the performance of active Australian equity mutual funds and whether they demonstrate similar return performance and...

  • Arbitrage, Institutional Investors, and the Monday Effect. Pettengill, Glenn N.; Wingender Jr., John R.; Kohli, Raj // Quarterly Journal of Business & Economics;Summer/Autumn2003, Vol. 42 Issue 3/4, p49 

    In this paper we examine the hypothesis that the Monday effect disappeared as a result of arbitrage activity by institutional investor trading empowered by a reduction in transaction costs. Our empirical results argue against this conclusion because of the following: 1) We find that changes in...


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics