| Title: | Market Investing |
| Moderator: | 2155::michaud |
| Created: | Thu Jan 23 1992 |
| Last Modified: | Thu Jun 05 1997 |
| Last Successful Update: | Fri Jun 06 1997 |
| Number of topics: | 1060 |
| Total number of notes: | 10477 |
It seems to me that funds based on stable indexes (such as the S&P 500)
are a way to avoid much of the dreaded "realized capital gains" that
are taxed every year.
If a fund is holding a constant portfolio, and only sells/buys as
people buy in and sell out, then the only realized yield should be
in dividends, or due to changes in the index composition.
Am I right ? What might I have overlooked here ?
To what extent do most index funds match the index composition exactly,
versus the often seen quote "seeks to match the PERFORMANCE of ..."
(capitalization mine) ? I asked a phone dweeb at Fidelity about this,
and he said that only 80% of their S&P indexfund is held in equities,
and wasn't very helpful otherwise.
I'll be looking into the often recommended Vanguard - any other
recommendations ?
\chuck
| T.R | Title | User | Personal Name | Date | Lines |
|---|---|---|---|---|---|
| 934.1 | Vanguard | SLOAN::HOM | Wed Nov 01 1995 16:29 | 8 | |
Vanguard is the absolute lowest expense ratio retail SP500 index fund available. The only scenario that I can think of (and it's unlikely but possible) is if there were a net redemption. In that case, the fund would have to sell shares - possibly with capital gains. Gim | |||||
| 934.2 | VAXCPU::michaud | Jeff Michaud - ObjectBroker | Wed Nov 01 1995 23:43 | 14 | |
> If a fund is holding a constant portfolio, and only sells/buys as > people buy in and sell out, then the only realized yield should be > in dividends, or due to changes in the index composition. Yup, changes to the index will realize gains (or maybe losses as there is probably a reason a stock is being removed from the index). However as you certainly realize (by choosing one based on S&P500 vs. the DJIA or other DJ index), a few changes every now and then with 500 stocks in the index probably will be pennies (at least relatively speaking :-) in realized gains. There are some other even broader indexes, but I have no idea if any have funds that mirror their composition, or if even those indexes fair as well as the S&P500 .... | |||||