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Funds for taxable accounts
Old 04-19-2005, 05:07 AM   #1
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Funds for taxable accounts

To the fund junkies out there, what funds are you holding in your taxable account? I am a fan of Trowe Price Capital Appreciation Stock Fund but it is not very tax efficient. I know ETF's are a good way to go but would like to know what you would recommend on a 50/50 conservative split.

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Re: Funds for taxable accounts
Old 04-19-2005, 05:58 AM   #2
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Re: Funds for taxable accounts

If you seek tax efficiency I would reco Vanguard Tax Managed Funds. *I believe (off the top of my head) they offer Large Cap, Small Cap, Foreign & some Balanced funds (which I believe would suit you). *They manage the funds in a way to minimize the tax bill for the big players such as yourself. *

I would reco the Dodge & Cox flagship fund for actively managed but it closed a little while ago. *They follow a strict passive management style and the low turnover leads to lower bills. *Maybe one to look out for in the future.

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Re: Funds for taxable accounts
Old 04-20-2005, 02:54 PM   #3
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Re: Funds for taxable accounts

I'm trying to hold foreign funds in taxable, to get the foreign tax credit. VWO/VEIEX for example, EM index, has about .25% forn tax credit a year lately, and under 2% distribution per year last 3 years. With the new vipers, I expect it to be pretty tax efficient in future.

If all foreign funds are already in taxable account, then one to consider is VTI. Quite tax efficient, as the vipers can slowly eliminate low cost basis shares when people are selling, and the old mutual fund can take losses on redemptions by selling high cost basis shares, and the index doesn't need to be rebalanced--it's the total stock market.

If you mean active funds, then I'd consider foreign, tax managed, and/or low turnover. One that comes to mind is TAVFX, mostly US, but has had low turnover so probably tax efficient.
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Re: Funds for taxable accounts
Old 04-20-2005, 03:27 PM   #4
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Re: Funds for taxable accounts

Tax efficiency is only one aspect of choosing an asset allocation, and I think it's a minor aspect at that, but take a look at Tweedy, Browne.

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Re: Funds for taxable accounts
Old 04-20-2005, 04:27 PM   #5
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Re: Funds for taxable accounts

Indexing works great in taxable accounts. If your income is high municipals are great, especially if you live in a high tax state that's targeted by one of Vanguard's funds.

Look into:
Vanguard Index500
Vanguard Total Stock Market Index
Vanguard Intermediate Term Muni
Vanguard State Specific Munis (Ca, NY, MA, etc.)
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