Capital gains distribution season is fast approaching—and it’s shaping up to be a costly one. Regardless of how big those payouts end up being, now’s the most critical time to pay attention to the details and the calendar.
If you need a refresher on capital gains, see my Capital Gains 101 and 102 articles. But if you’re short on time, here are the absolute basics:
Every December, Vanguard must pay out interest, income and any trading profits (called capital gains) that have built up over the year. You’ll receive a distribution if you own a fund on its record date.
As a shareholder, you’re taxed on the capital gains you receive—even if you automatically reinvest the distribution into the fund.
When it comes to retirement accounts (IRAs, 401(k)s, etc.), you don’t have to worry. But for those of you with investments in taxable brokerage accounts, this is where you need to be paying attention.
Toward the end of October, I gave you an early look at what we might expect from distribution season. (And I explained that ETFs and index funds don’t eliminate your tax bill—they just give you more control over its timing. See here.)
Today, I have an in-depth preview with official Vanguard data. My goal is to give you the information you need to navigate the payout season with confidence. Below, I’ve laid out what Vanguard expects for distributions and when it plans to pay them. I’ve also included details on the PRIMECAP Odyssey funds.
I pulled data from Vanguard’s website on November 10. Things can and do change—including distribution dates—but I’ll keep you posted via the Weekly Brief.
Expected Capital Gain Distributions
In the table below, you’ll find the funds Vanguard expects to distribute capital gains to shareholders this year.
If you don’t see your fund listed, good news—it isn’t expected to make a payout.
For each fund, I’ve included the ticker symbol, record date, estimated per-share dollar distribution and the same payout expressed as a percentage of the fund’s price.
I find the percentage column especially helpful when comparing funds with different share prices. That said, many of you will find the per-share dollar amount more practical—it makes it easier to estimate how much you will receive in gains. So, I’ve shown it both ways.
I’ve also included a “Don’t Purchase Between” column. This only applies to taxable accounts—and only if you want to follow my “1% rule” for avoiding buying a distribution.
Here’s the short version of the rule:
Avoid purchasing the fund one week before a distribution for every 1% of NAV it’s expected to distribute. (If the fund is paying out less than 1% of NAV, I still recommend waiting a whole week before the payout.)
Yes, for many funds making payouts this year, that means pausing new purchases until after the December record dates. It’s not a hard-and-fast rule, but it’s a sensible guideline that’s served me well over the years.
Below is the complete table—starting with the biggest expected payouts. Use this list to spot the potential trouble spots (in your taxable accounts) early, whether that’s avoiding an unnecessary tax bill or timing your purchases wisely.