Mutual Fund Tax Clienteles

Date Added: Mar 2010
Format: PDF

Mutual funds are pooled investment vehicles with diverse tax clienteles - taxable accounts and tax-qualified retirement accounts. Paper investigates whether the characteristics, investment strategies, and performance of mutual funds held by diverse tax clienteles differ. Examining mutual funds' income distributions and holdings, the author finds that funds held primarily by taxable investors tend to be more tax-efficient than funds held primarily in tax-deferred retirement accounts. Despite these differences, they find no evidence that any investment constraints that may arise from the funds that pursue tax efficient management strategies result in performance differences between funds held by different tax clienteles.