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Tax managed funds
Old 05-20-2014, 02:45 PM   #1
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Tax managed funds

I know I should also post this on Bogleheads, but I have not officially joined yet. And, I know there are many savvy investors here as well.

My question: I am still working and am in the highest tax bracket. I am looking at buying Tax-Managed Capital Appreciation - Admiral Shares.

I am looking at this to have US large cap exposure but in a tax-efficient way. I don't need dividends yet; really looking more towards growth.

Pros and cons of tax managed?

Thanks in advance.

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Old 05-20-2014, 03:59 PM   #2
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We've owned this fund (along with its counterpart Tax-Managed Growth and Income) for more than 10 years. We chose them while still w*rking when we had some extra cash to invest and like you didn't really want to put it in a fund that would throw off lots of dividends and/or CGs. We haven't added to it in many years but are happy enough with it to hold it.

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Old 05-21-2014, 06:56 AM   #3
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I wonder what "tax-managed" means anymore in the context of the Vanguard funds.

Vanguard's stable of broad-market index funds are reasonably tax-efficient because of the associated ETF share class lets the managers bleed off low-basis stocks so that the mutual fund has little to no cap gains each year.

One might calculate the tax-efficiency for their own personal situation of these funds over the past few years. One may find that the Cap-Apprec is only a smidgeon more tax-efficient than the Total Stock Market Index, the Large-cap Index, and the S&P 500 Index fund.

Furthermore, Vanguard merged its tax-managed international fund into its developed markets index fund. To me that says that the days of Cap Apprec might be numbered.
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Old 05-21-2014, 07:01 AM   #4
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My tax managed "fund" is Berkshire Hathaway stock - no dividends, no taxes until I sell.
Yes, I have achieved work / life balance.
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