In a broad bear market, a handful of Vanguard funds are set to hand shareholders a big tax bill in December—talk about adding insult to injury. On the surface that doesn’t make a lot of sense. If stock prices are down, how are funds paying capital gains? Dig a little deeper though, and I’m actually surprised more funds aren’t paying out more in gains this year. I’ll explain, but let’s start at the beginning.
In December, Vanguard—as it does every year—will distribute interest, income and realized capital gains from its mutual funds and ETFs. I will go into the ins-and-outs of capital gains distributions in the weeks ahead—and hope to have the schedule of when each Vanguard fund is paying out to shareholders. But here are the basics.