{"id":5222,"date":"2022-12-22T14:35:22","date_gmt":"2022-12-22T19:35:22","guid":{"rendered":"https:\/\/www.dupreefinancial.com\/?p=5222"},"modified":"2024-01-02T19:51:45","modified_gmt":"2024-01-03T00:51:45","slug":"capital-gains-distribution-from-your-mutual-fund-why-this-year","status":"publish","type":"post","link":"https:\/\/www.dupreefinancial.com\/capital-gains-distribution-from-your-mutual-fund-why-this-year\/","title":{"rendered":"Capital Gains Distribution from Your Mutual Fund: Why This Year?"},"content":{"rendered":"<iframe src=\"https:\/\/player.blubrry.com\/?media_url=https%3A%2F%2Fmedia.blubrry.com%2Ftomdupreeshow%2Fcontent.blubrry.com%2Ftomdupreeshow%2F2022_12_10_tom_dupree_hour_2.mp3&amp;modern=1&amp;podcast_link=https%3A%2F%2Fwww.dupreefinancial.com%2Fcapital-gains-distribution-from-your-mutual-fund-why-this-year%2F#mode-Light&border-000000&progress-000000\" scrolling=\"no\" width=\"100%\" height=\"165\" frameborder=\"0\" id=\"blubrryplayer-1\" class=\"blubrryplayer\" title=\"Blubrry Podcast Player\"><\/iframe><p dir=\"ltr\"><span class=\"ContentPasted0\">If you received a capital gains distribution on your mutual fund this year, you might be screaming aloud, \u201cHow in the heck is this possible?\u201d<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">We have seen what is possibly in the offing for mutual fund owners this year, and it isn&#8217;t pretty!<\/span><\/p>\n<p dir=\"ltr\">This is the scenario what will haunt millions of investors in the next few months:<\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">It is February 15th\u2026<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">You walk to your mailbox just like you do every day.<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">Then, you carry that mail to your office desk and sift through all your bills. You stumble across a statement from your mutual fund.<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">You open the envelope and notice a 1099-DIV statement. Your normal dividends are there, but under the heading of capital gains distribution you see a number that is\u2026 shockingly huge despite the fund being down for the year!<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">What is this?<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">How is this so much bigger than any other year? It is several times any number you have ever seen on this section of your form in the past!<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">What a terrible joke!\u00a0<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">Did they make a mistake?<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">The mutual fund was down 20% last year, how could you possibly have a tax obligation for capital gains?<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">If you are like millions of other mutual fund investors, you reinvest your dividends and capital gains distributions, so you didn\u2019t actually receive a check.<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">You immediately pick up the phone and call your fund. <\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">After what seems like an eternity you get someone to explain that it is, in fact, accurate and that you owe the IRS taxes on this amount.<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">If you didn\u2019t get a satisfactory answer to this question, this is the article for you.\u00a0<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">We will explain capital gains and discuss how these are calculated with respect to mutual funds.<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">There might just be a better way for you to build wealth in the future!<\/span><\/p>\n<p dir=\"ltr\"><!--more--><\/p>\n<h2 dir=\"ltr\"><strong><span class=\"ContentPasted0\">What are Capital Gains?<\/span><\/strong><\/h2>\n<p dir=\"ltr\"><img decoding=\"async\" class=\"aligncenter size-full wp-image-5224\" src=\"https:\/\/www.dupreefinancial.com\/wp-content\/uploads\/2022\/12\/growth.jpg\" alt=\"growth embedded gains\" width=\"458\" height=\"340\" srcset=\"https:\/\/www.dupreefinancial.com\/wp-content\/uploads\/2022\/12\/growth.jpg 458w, https:\/\/www.dupreefinancial.com\/wp-content\/uploads\/2022\/12\/growth-300x223.jpg 300w\" sizes=\"(max-width: 458px) 100vw, 458px\" \/><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">If you are investing in 2022, you might need to be reminded of capital gains. <\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">Unless you invested in the <a href=\"https:\/\/www.dupreefinancial.com\/3-reasons-the-arbitrage-opportunity-in-natural-gas-is-best-solved-by-us-companies\/\" target=\"_blank\" rel=\"noopener\">oil &amp; gas sector<\/a>\u00a0 in companies like EOG Resources, it has been a tough ride this year.<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">Capital gains occur when you sell a particular asset for more than your cost basis.<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">For most asset classes, this is really easy to calculate. Your cost basis will typically be what you actually paid for the investment.<\/span><\/p>\n<p dir=\"ltr\"><strong><span class=\"ContentPasted0\">Capital Gains = (Sale Price &#8211; Cost Basis)<\/span><\/strong><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">This profit is taxable income. If this asset was held for longer than one year, it will be taxed as a long-term gain at the following rates:<\/span><\/p>\n<p dir=\"ltr\"><img decoding=\"async\" class=\"aligncenter size-full wp-image-5225\" src=\"https:\/\/www.dupreefinancial.com\/wp-content\/uploads\/2022\/12\/long-term-rates.png\" alt=\"capital gains distributions long-term rates \" width=\"853\" height=\"425\" srcset=\"https:\/\/www.dupreefinancial.com\/wp-content\/uploads\/2022\/12\/long-term-rates.png 853w, https:\/\/www.dupreefinancial.com\/wp-content\/uploads\/2022\/12\/long-term-rates-480x239.png 480w\" sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) 853px, 100vw\" \/><\/p>\n<h3 dir=\"ltr\"><strong><span class=\"ContentPasted0\">Capital Gains Example<\/span><\/strong><\/h3>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">Let\u2019s say, for example, that you purchased 100 shares of Berkshire Hathaway Class B shares in July of 2020 for $200.00 per share. Then, in December of 2022, you sold those same shares for $300.00 per share. At the time you sold those specific shares, you realized a capital gain. Your investment of $20,000 had grown to $30,000 and you made a tidy profit of $10,000 in a little over 2 years.<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">If you are a single, hard-working woman who earned $200,000 in 2022, you would be subject to a long-term capital gain tax obligation of $1,500. And would need to pay that amount to the IRS if you held those shares outside of a tax-sheltered account.<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">($30,000 sale price &#8211; $20,000 cost basis) x (15% long term capital gains tax rate) = $1,500<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">If you held that investment for less than one year, your profit would be taxed as ordinary income and would be subject to the following marginal tax rates:<\/span><\/p>\n<p dir=\"ltr\"><img decoding=\"async\" class=\"aligncenter size-full wp-image-5226\" src=\"https:\/\/www.dupreefinancial.com\/wp-content\/uploads\/2022\/12\/short-term-tax-tables.png\" alt=\"capital gains distribution short-term\" width=\"636\" height=\"373\" srcset=\"https:\/\/www.dupreefinancial.com\/wp-content\/uploads\/2022\/12\/short-term-tax-tables.png 636w, https:\/\/www.dupreefinancial.com\/wp-content\/uploads\/2022\/12\/short-term-tax-tables-480x282.png 480w\" sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) 636px, 100vw\" \/><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">Had you made the same gain on your investment in Berkshire Hathaway in a timeframe shorter than 12 months, you would owe the IRS not $1,500 but $3,200 for this transaction.<\/span><\/p>\n<p dir=\"ltr\"><strong><span class=\"ContentPasted0\">This is relatively simple!\u00a0<\/span><\/strong><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">When you sell shares of stock for more than you paid, you have a capital gain or profit. And when you make money, the IRS gets a cut.<\/span><\/p>\n<h2 dir=\"ltr\"><strong><span class=\"ContentPasted0\">Taxation of Capital Gains on a Mutual Fund Scheme<\/span><\/strong><\/h2>\n<p dir=\"ltr\"><img decoding=\"async\" class=\"aligncenter size-full wp-image-5227\" src=\"https:\/\/www.dupreefinancial.com\/wp-content\/uploads\/2022\/12\/taxation.jpg\" alt=\"taxation\" width=\"510\" height=\"340\" srcset=\"https:\/\/www.dupreefinancial.com\/wp-content\/uploads\/2022\/12\/taxation.jpg 510w, https:\/\/www.dupreefinancial.com\/wp-content\/uploads\/2022\/12\/taxation-480x320.jpg 480w\" sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) 510px, 100vw\" \/><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">Much like purchasing individual stocks, when you sell or redeem your mutual fund shares you could be hit with a capital gains tax liability.<\/span><\/p>\n<p dir=\"ltr\"><strong><span class=\"ContentPasted0\">Although none of us enjoy paying taxes, this is at least understandable.<\/span><\/strong><\/p>\n<h3 dir=\"ltr\"><strong><span class=\"ContentPasted0\">Capital Gains at Redemption<\/span><\/strong><\/h3>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">Let\u2019s say you bought shares in XYZ mutual fund five years ago. At that time, you paid $10.00 per share to purchase 1000 shares of this open-end fund. You now decide to redeem these shares directly from the fund, and the net asset value is determined to be $12.00 per share at 4:00 PM at the end of the trading day.<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">Assuming you have no back-end sales load on this redemption (which you likely will), you would show a capital gain of $2.00 per share or $2,000. Since this holding was longer than 1 year and it was held in a taxable account, you would be subject to a long-term capital gains tax on that $2,000.<\/span><\/p>\n<h3 dir=\"ltr\"><strong><span class=\"ContentPasted0\">Mutual Fund Capital Gains Distribution<\/span><\/strong><\/h3>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">The capital gains distribution is the raw deal with the taxation of mutual funds.<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">Okay, so you didn\u2019t sell your mutual fund this year when others were panicking. But you still find yourself with a tax bill.<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">How can this be?<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">When you bought those 100 shares of Berkshire Hathaway Class B shares, you knew your cost. You paid $200.00 per share. Similarly, when you buy a mutual fund, you know what you paid for the mutual fund.\u00a0<\/span><\/p>\n<p dir=\"ltr\"><strong><span class=\"ContentPasted0\">It\u2019s what you didn\u2019t know that is coming back to bite you right where it hurts the most: your wallet.<\/span><\/strong><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">When you decided to participate in a mutual fund, you inherited a tax liability you might just now be learning about. The fund itself had likely been sitting on a basket of equities that were worth much more than what the fund had originally paid.<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">And the fund will not realize capital gains until it sells that position. Furthermore, those capital gains are distributed to you (typically in December) when it liquidates that position.\u00a0<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">It doesn\u2019t matter when<\/span><span class=\"ContentPasted0\">\u00a0<strong>you<\/strong><\/span><span class=\"ContentPasted0\"><strong>\u00a0bought<\/strong> the fund.\u00a0<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">It doesn\u2019t matter that\u00a0<\/span><strong><span class=\"ContentPasted0\">you are down<\/span><\/strong><span class=\"ContentPasted0\">\u00a0on your holdings this year.<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">And it most definitely does not matter what the value of that specific equity was when you bought into the mutual fund.<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">The only thing that matters is that the fund itself sold the position and realized the capital gain at that moment. The fund is\u00a0<\/span><span class=\"ContentPasted0\">forced<\/span><span class=\"ContentPasted0\">\u00a0to distribute those capital gains to its fund owners. And you are now subject to a tax obligation that you might not have had any clue you would be hit with.<\/span><\/p>\n<h4 dir=\"ltr\"><strong><span class=\"ContentPasted0\">Embedded Capital Gains Example<\/span><\/strong><\/h4>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">Let\u2019s say that the fund had purchased those same Berkshire Hathaway shares back in 2020 for $200.00 per share, but you didn\u2019t buy shares in the mutual fund that owned them until July of 2022. At the time you purchased the mutual fund, it was sitting on an unrealized (or embedded) capital gain of $100.00 per share on that purchase. At some point in time, the mutual fund will likely sell that position. And when it does\u2026 you will inherit a tax liability representing your portion of that holding.\u00a0<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">Your cost basis for those shares was determined at the time that it bought the shares, not at the time you bought the fund\u2026 yuck!<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">To add insult to injury, it is exactly in years that the market is down that mutual funds will be more likely to make capital gains distributions.<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">This might be counterintuitive, but it is true, nonetheless.<\/span><\/p>\n<h4 dir=\"ltr\"><strong>Net Outflows Force Funds to Realize Capital Gains<\/strong><\/h4>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">When market corrections occur, there are typically net outflows from mutual funds: redemptions increase. Looking at the data from the Investment Company Institute (ICI), net outflows from equity funds totaled approximately\u00a0<\/span><a class=\"ContentPasted0\" href=\"https:\/\/www.ici.org\/research\/stats\/flows\" target=\"_blank\" rel=\"noopener\">$22.7 Billion<\/a><span class=\"ContentPasted0\">\u00a0for the week ending December 7, 2022. And this is not an isolated event. Net outflows from equity funds had occurred each of the prior four weeks as well.<\/span><\/p>\n<p dir=\"ltr\"><img decoding=\"async\" class=\"aligncenter size-full wp-image-5228\" src=\"https:\/\/www.dupreefinancial.com\/wp-content\/uploads\/2022\/12\/ICI-outflows.png\" alt=\"outflows from mutual funds\" width=\"956\" height=\"489\" srcset=\"https:\/\/www.dupreefinancial.com\/wp-content\/uploads\/2022\/12\/ICI-outflows.png 956w, https:\/\/www.dupreefinancial.com\/wp-content\/uploads\/2022\/12\/ICI-outflows-480x246.png 480w\" sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) 956px, 100vw\" \/><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">According to\u00a0<\/span><a class=\"ContentPasted0\" href=\"https:\/\/citywire.com\/pro-buyer\/news\/mutual-fund-outflows-top-800bn-for-2022-their-worst-year-ever\/a2404972\" target=\"_blank\" rel=\"noopener\">Citywire<\/a><span class=\"ContentPasted0\">, the mutual fund industry is having its worst year for redemptions on record. Through the first 11 months of 2022, there have been approximately $807 Billion redeemed from US mutual funds.<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">The average investor is terrible at <\/span><a class=\"ContentPasted0\" href=\"https:\/\/www.dupreefinancial.com\/3-reasons-why-market-timing-does-not-work\/\" target=\"_blank\" rel=\"noopener\">timing the market<\/a><span class=\"ContentPasted0\">. When the value of equities or funds fall, investors fear the trend will continue and their own\u00a0<\/span><a class=\"ContentPasted0\" href=\"https:\/\/www.dupreefinancial.com\/quit-letting-recency-bias-dictate-your-investment-strategy\/\" target=\"_blank\" rel=\"noopener\">recency bias<\/a><span class=\"ContentPasted0\">\u00a0convinces them to sell. You might stay the course and realize that the market doesn\u2019t go straight up.\u00a0<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">There are bumps along the way as you chart your financial future.<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">The stock market goes up and down, but solid companies endure.<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">But many of your fellow mutual fund owners are not that strong-minded. They sell when the market is falling. If you own individual shares, that doesn\u2019t affect your tax liability. However, when this happens inside of a mutual fund it matters greatly.<\/span><\/p>\n<h4 dir=\"ltr\"><strong><span class=\"ContentPasted0\">You might wonder, \u201cWhy?\u201d<\/span><\/strong><\/h4>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">Under typical market conditions, mutual funds have enough cash on hand to pay for redemptions. In that environment, the fund can continue to maintain its equity holdings and defer capital gains. However, when there are massive outflows from mutual funds, cash needs to be raised to pay for these liquidations. So, the fund is forced to sell some of its holdings.<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">So, when you see headlines that read, \u201cthis is the worst year on record for mutual fund redemptions\u201d, you could also infer that it will be a big year for capital gains distributions.<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">Regardless of when it eventually happens, if you are invested in a mutual fund that has had a good track record it was likely sitting on embedded gains when you bought it. At some point in the future, owners in the fund will be forced to shoulder the tax burden (if they hold the fund in a taxable account).<\/span><\/p>\n<h2 dir=\"ltr\"><strong><span class=\"ContentPasted0\">Embedded Capital Gains in Mutual Funds<\/span><\/strong><\/h2>\n<p dir=\"ltr\"><img decoding=\"async\" class=\"aligncenter size-full wp-image-5229\" src=\"https:\/\/www.dupreefinancial.com\/wp-content\/uploads\/2022\/12\/tax-burden.jpg\" alt=\"embedded capital gains capital distributions\" width=\"509\" height=\"339\" srcset=\"https:\/\/www.dupreefinancial.com\/wp-content\/uploads\/2022\/12\/tax-burden.jpg 509w, https:\/\/www.dupreefinancial.com\/wp-content\/uploads\/2022\/12\/tax-burden-480x320.jpg 480w\" sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) 509px, 100vw\" \/><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">Just how big of a deal are these so-called \u201cembedded capital gains\u201d in mutual funds?<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">It turns out it is\u2026 Huge!<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">Take a look at one of the largest active open-end funds, American Funds Growth Fund of America. After the close of the market on 12\/16\/2022, the NAV of the fund was\u00a0<\/span><a class=\"ContentPasted0\" href=\"https:\/\/www.capitalgroup.com\/institutional\/investments\/fund\/agthx\" target=\"_blank\" rel=\"noopener\">$50.01<\/a><span class=\"ContentPasted0\">, and had assets under management (AUM) of approximately $210 Billions. As of May 31, 2022, it was estimated by Morningstar that in excess of 64% of its net asset value was unrealized capital gains.<\/span><\/p>\n<p dir=\"ltr\"><strong><span class=\"ContentPasted0\">64% of American Funds Growth Fund of America\u2019s NAV was unrealized capital gains!<\/span><\/strong><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">Think about that for a moment!<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">I realize that the fund likely won\u2019t liquidate everything in one year, but if you purchase one share of any fund that has that type of unrealized capital gain you are buying a tax burden.<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">Let\u2019s suggest you invest $100,000 in a mutual fund in a taxable account. You didn\u2019t realize it at the time, but as a percentage of the assets held in that fund, 60% of its net assets are embedded capital gains. Then, right after you buy the fund, it is forced to liquidate its entire position. Miraculously, the liquidation of the fund doesn\u2019t depress your assets and you are made whole. You receive the entire $100,000 back and think you lost nothing.<\/span><\/p>\n<h4 dir=\"ltr\"><strong><span class=\"ContentPasted0\">But guess what? You owe the IRS money!<\/span><\/strong><\/h4>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">There wasn&#8217;t a felt capital by you at all. You invested $100,000 and received $100,000 in return for a real gain to you of $0.00. However, because of the magic of mutual funds, you actually have a capital gains distribution of $60,000 because of these embedded gains. You would be subject to a taxable capital gain of $60,000 when you personally felt no gain!<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">This is an extreme example and isn\u2019t very likely to happen. But a portion of that does happen, and it most often occurs in exactly the years in which the market has fallen.<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">It is a double whammy! The market sells off and you are hit with a capital gains distribution.<\/span><\/p>\n<h2 dir=\"ltr\"><strong><span class=\"ContentPasted0\">Invest With Dupree Financial Group<\/span><\/strong><\/h2>\n<p dir=\"ltr\"><img decoding=\"async\" class=\"aligncenter size-full wp-image-5230\" src=\"https:\/\/www.dupreefinancial.com\/wp-content\/uploads\/2022\/12\/invest-with-dupree.jpg\" alt=\"grow wealth and prevent capital gains distributions\" width=\"612\" height=\"408\" srcset=\"https:\/\/www.dupreefinancial.com\/wp-content\/uploads\/2022\/12\/invest-with-dupree.jpg 612w, https:\/\/www.dupreefinancial.com\/wp-content\/uploads\/2022\/12\/invest-with-dupree-480x320.jpg 480w\" sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) 612px, 100vw\" \/><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">Is there a better way to diversify your holdings and avoid a capital gains distribution?<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">Most definitely!<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">You are purchasing open-end mutual funds and receiving capital gains distributions in which you don\u2019t control at all. Instead, you could purchase individual stocks that meet your long-term needs. <\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">Only then will you know what your exact cost basis is for your equity holdings.<\/span><\/p>\n<p dir=\"ltr\"><strong><span class=\"ContentPasted0\">And this is exactly what you get from us at\u00a0<\/span><a class=\"ContentPasted0\" href=\"http:\/\/dupreefinancial.com\/\" target=\"_blank\" rel=\"noopener\">Dupree Financial Group, LLC<\/a><span class=\"ContentPasted0\">.<\/span><\/strong><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">Using our services, you can own individual equities. And when you purchase individual companies, you don\u2019t inherit embedded gains like you do with a mutual fund. With<\/span><span class=\"ContentPasted0\">\u00a0our firm, you also get the benefit of a relationship with a trusted financial advisor. We have over 40 years of experience building wealth for our clients. And our value-oriented approach to investing can help you build your portfolio in any investment climate.\u00a0<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">The\u00a0<\/span><a class=\"ContentPasted0\" href=\"https:\/\/www.dupreefinancial.com\/3-reasons-i-am-excited-during-this-down-market\/\" target=\"_blank\" rel=\"noopener\">down market<\/a><span class=\"ContentPasted0\">\u00a0that we have been going through this year actually has us excited for the future. It is this exact climate that real wealth can be created. Opportunities abound in this climate and could set the stage for tremendous returns.<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">The investment software that we utilize also sets us apart from our peers. It keeps you, the investor, constantly informed on your positions. With us, you will never be left in the dark about the cost basis of any of your investments: no surprises at tax time.<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">If you have your money sitting in mutual funds of any type, this might be the perfect time for you to get a no-obligation second set of eyes on your portfolio.<\/span><\/p>\n<p dir=\"ltr\"><span class=\"ContentPasted0\">We don\u2019t know about you, but we detest tax bills, especially when they are a surprise!<\/span><\/p>\n<p dir=\"ltr\"><a class=\"ContentPasted0\" href=\"http:\/\/dupreefinancial.com\/contact\" target=\"_blank\" rel=\"noopener\">Contact us<\/a><span class=\"ContentPasted0\">\u00a0today.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>If you received a capital gains distribution on your mutual fund this year, you might be screaming aloud, \u201cHow in the heck is this possible?\u201d We have seen what is [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":5229,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[17,1],"tags":[],"class_list":["post-5222","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","category-podcasts"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.2 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Capital Gains Distribution from Your Mutual Fund: Why This Year? - Dupree Financial<\/title>\n<meta name=\"description\" content=\"How could you have received a huge capital gains distribution from your mutual fund this year? 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