What Fund Distributions Mean for Your Portfolio

While you have no control over fund distributions, there are steps that can be taken to minimize their impact.

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• Explanation of fund distributions, including dividends, interest income and capital gains

• Tax implications of distributions for ETFs versus mutual funds and the role of taxable versus tax-advantaged accounts

• Investor strategies to minimize tax impact, including timing purchases and sales and reinvestment of fund distributions

When selecting exchange-traded funds (ETFs) or mutual funds, investors often weigh factors such as the fund’s objective, strategy, performance, fees and how well it fits within their overall portfolio. Tax considerations take a back seat to these other features until a distribution is made or tax season arrives.