Tax-Efficient Asset Management: Evidence from Equity Mutual Funds / Clemens Sialm, Hanjiang Zhang.

Format:

Book

Author/Creator:

Sialm, Clemens.

Contributor:

National Bureau of Economic Research.

Zhang, Hanjiang.

Series:

Working Paper Series (National Bureau of Economic Research) no. w21060.

NBER working paper series no. w21060

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Tax-Efficient Asset Management

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2015.

Summary:

Investment taxes have a substantial impact on the performance of taxable mutual fund investors. Mutual funds can reduce the tax burdens of their shareholders by avoiding securities that are heavily taxed and by avoiding realizing capital gains that trigger higher tax burdens to the funds' investors. Such tax avoidance strategies constrain the investment opportunities of the mutual funds and might reduce their before-tax performance. Our paper empirically investigates the costs and benefits of tax-efficient asset management based on U.S. equity mutual funds. We find that mutual funds that follow tax-efficient asset management strategies generate superior after-tax returns. Surprisingly, more tax-efficient mutual funds do not underperform other funds before taxes, indicating that the constraints imposed by tax-efficient asset management do not have significant performance consequences.

Notes:

Print version record

April 2015.