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Tax Externalities of Equity Mutual Funds / John B. Shoven, Joel Dickson, Clemens Sialm.
- Format:
- Book
- Author/Creator:
- Shoven, John B.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w7669.
- NBER working paper series no. w7669
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2000.
- Summary:
- Investors holding mutual funds in taxable accounts face a classic externality. The after-tax return of their investment depends on the behavior of others. In particular, redemptions may force the mutual fund to sell some of its equity positions in order to pay off the liquidating investors. As a result, it may be forced to distribute taxable capital gains to its shareholders. On the other hand, new investors convey a positive externality upon existing investors by diluting the unrealized capital gain position of the fund. This paper's simulations show that these externalities are important determinants of the after-tax performance of equity mutual funds.
- Notes:
- Print version record
- April 2000.
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