Redeeming funds before December distributions

[explanade]

So it should all even out, you sell before the distributions, the NAV should be higher but if you wait until after you collect the distributions, the NAV would be lower, assuming the market is mostly steady?

December has the biggest distributions so maybe you miss out by selling early but OTOH, people do things like tax loss harvesting or trimming so it must be a common occurrence, to sell funds late in the year?

 

[jebmke]

A lot of people time their RMDs at the end of the year which also probably triggers sales. No RMDs this year, however.

 

[foxfirev5]

Based on today's close the opportunities for TLH are evaporating quickly. I've suddenly gone from potential loss to gain in a short period of time.

 

[explanade]

Based on today's close the opportunities for TLH are evaporating quickly. I've suddenly gone from potential loss to gain in a short period of time.

There are worse problems than not being able to TLH in a given year.




So has anyone sold funds in taxable accounts in late November, early December?

 

[foxfirev5]

There are worse problems than not being able to TLH in a given year.

Absolutely. I was merely responding to the OP's question. I'm a big boy and will accept whatever the market gives me.

 

[audreyh1]

So it should all even out, you sell before the distributions, the NAV should be higher but if you wait until after you collect the distributions, the NAV would be lower, assuming the market is mostly steady?

December has the biggest distributions so maybe you miss out by selling early but OTOH, people do things like tax loss harvesting or trimming so it must be a common occurrence, to sell funds late in the year?

If you sell the funds entirely, yes, it’s mostly a wash. But there are a few minor quibbles. Assuming you’ve held the fund for a long time, you can avoid any short term cap gains distributions and non-qualified dividend distributions by selling ahead which hopefully makes it 100% long-term cap gains which gets better tax treatment.

People only do tax loss harvesting if they have losses to realize. Not likely when a fund is near highs. Tax loss harvesting is usually done during a big sell off like we had in March/April.

If I trim a fund I usually wait to trim early the next year, unless the realized gain in the fund is less than the estimated distribution in which case I sell the entire fund ahead assuming it’s not one I plan to keep long term.