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Why did I receive short term capital gains?
Old 09-11-2021, 10:26 AM   #1
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Why did I receive short term capital gains?

My shares of FCPGX – Fidelity Small Cap Growth - distributed both short and long term capital gains on 9-10-2021. I've held these shares for several years. Why did I receive short term capital gains? I thought all shares over 1 year only paid long term capital gains.
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Old 09-11-2021, 10:38 AM   #2
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You own the fund. The fund took a short term capital gain and that was passed on to you.
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Old 09-11-2021, 10:42 AM   #3
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Thanks for your help!!
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Old 09-11-2021, 10:47 AM   #4
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This is why we changed from Funds to ETF's for a lot of holdings, over a period of years.

Funds might buy and sell and generate capital gains both short and long term. ETF's do this much much less.
That way we now get less tax time surprises of declared capital gains.
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Old 09-11-2021, 12:44 PM   #5
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Wow, that was quite a capital gain distribution!

DatePer Share AmountReinvestment Price
9/10/21$5.023$34.23
12/18/20$1.179$34.06
9/11/20$1.61$26.94
12/20/19$0.261$27.40
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Old 09-11-2021, 01:22 PM   #6
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I was surprised with the amount. $2.36 was short term and $2.66 long term!
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Old 09-11-2021, 01:36 PM   #7
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I was surprised with the amount. $2.36 was short term and $2.66 long term!
They generally save these up and distribute no less than once yearly.
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Old 09-11-2021, 02:12 PM   #8
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I used to own an actively managed small-cap fund & sold it because of the wildly fluctuating cap gains distributions that made ACA planning impossible.



I moved that part of my portfolio to a small cap index fund and have had no cap gain distributions since. Total returns are about the same.
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Old 09-12-2021, 04:36 PM   #9
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Yeah I got anxious reading this but I have FECPX which is the index version so the distributions are modest. Now Iíll compare the two funds and hopefully reaffirm my section of the index version.
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Old 09-12-2021, 05:29 PM   #10
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If you are sitting in the chair when the MF distributes ... it is yours.

nothing personal. With MF you should keep track of embedded in MF you own or are considering.
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Old 09-12-2021, 06:29 PM   #11
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Quote:
Originally Posted by walkinwood View Post
I used to own an actively managed small-cap fund & sold it because of the wildly fluctuating cap gains distributions that made ACA planning impossible.

I moved that part of my portfolio to a small cap index fund and have had no cap gain distributions since. Total returns are about the same.
I did the same thing at the end of 2019, but with large-cap funds (switching from an actively managed one to an index one). The lost ACA subsidies were growing, so it was time to get back on that train in 2020.
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Old 09-14-2021, 10:40 AM   #12
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Quote:
Originally Posted by gbstack View Post
My shares of FCPGX – Fidelity Small Cap Growth - distributed both short and long term capital gains on 9-10-2021. I've held these shares for several years. Why did I receive short term capital gains? I thought all shares over 1 year only paid long term capital gains.
By law, when an MF manager sells some of his holdings and realizes a gain or loss, he has to pass it on to his shareholders. They have to pay taxes on the gain, although they are not selling any MF share.

This "premature" tax will be recovered by the long-term shareholder eventually when he sells. The distribution reduces the price of the MF share, so his future gain will be less. Or if he reinvests the distribution, he's buying back into the MF with a lower basis.

Quote:
Originally Posted by pb4uski View Post
Wow, that was quite a capital gain distribution!

DatePer Share AmountReinvestment Price
9/10/21$5.023$34.23
12/18/20$1.179$34.06
9/11/20$1.61$26.94
12/20/19$0.261$27.40
Yes, that's huge. It shows institutional investors are booking some of the gains in their hot stocks. They are rotating out of some hot sectors.

PS. Or maybe not. FCPGX – Fidelity Small Cap Growth - is shown to have a portfolio turnover of 126%. It means on the average they hold a share for 10 months. These guys are traders, and perhaps you have to be to play in this volatile stock sector.
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