TITLE

Drag on Gross Returns

PUB. DATE
November 2002
SOURCE
Journal of Financial Planning;Nov2002, Vol. 15 Issue 11, p29
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
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.
ACCESSION #
16936826

 

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