ziggy29
Moderator Emeritus
So in practical terms - if one has a majority of their after-tax investments in Wellington and wants to minimize the unpredictable (and uncontrollable) effect of CG Distributions, what would be an equivalent but much more tax efficient Vanguard fund to convert to?
Almost anything that is indexed will have very low capital gains. And some ETFs manage to produce almost no taxable income, year after year.
One of the closer matches to Wellington I can find is VSMGX (Life Strategy Moderate Growth), which is a "fund of index funds" that maintains a 60/40 AA and a 0.13% ER. It does generate some capital gains (in part to maintain an appropriate AA), but far less than most managed funds, including Wellington. If you wanted something a little closer to Wellington, like 65/35, you could keep about 85% into this fund and 15% into an equity index fund like an S&P or total market index -- or use a 50/50 index and add some total market index into it.
Of course, making that change may include substantial LTCG if your current position in Wellington is significantly appreciated, unless you can find some other way to reduce your MAGI that year. And if you wanted to maintain a specific asset allocation you'd have to occasionally rebalance which will also trigger some LTCG.
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