Distribution Season Is Upon Us - Adviser Investments

Distribution Season Is Upon Us

A seasonal chill is already in the air, and for investors that means preparing for a hit to the wallet: Year-end distributions are almost upon us. And with the market’s strong surge in the past year, that’s likely to mean capital gains for many.

Distributions are the accumulated income generated by funds over the course of the year. Unless your funds are held in a tax-deferred retirement account, this income is taxable in the year it is received, and should be included when you file your 2019 return next year. Payouts will be reinvested, deposited into your brokerage account or sent out as a check, depending on your standing instructions to the fund company.

Getting a handle on when and how much you’re likely to receive in the way of investment income will allow you to better plan your tax strategy—and perhaps make some key charitable donations before year’s end.

You should also be sure to check the distribution dates for any fund you’re considering investing in in the coming weeks. If you buy in before the fund pays out for 2019, you’ll be on the hook for taxes next year even though you didn’t own the shares when that income was earned. That’s a costly, avoidable mistake we call “buying the distribution,” something we generally avoid for our clients.

Vanguard announced preliminary distribution dates and capital gains estimates for its funds on November 12. To check on any funds you own or are considering investing in, you can look them up in this pdf version. Fidelity likewise announced preliminary dates and estimate for its funds here. Bear in mind, both companies may tweak their numbers in coming weeks, so it’s worth your while to keep these pages bookmarked and double-check to make sure estimates haven’t changed for your funds shortly before year-end.

Disclaimer: This material is distributed for informational purposes only. The investment ideas and opinions contained herein should not be viewed as recommendations or personal investment advice or considered an offer to buy or sell specific securities. Our statements and opinions are subject to change at any time, without notice and should be considered only as part of a diversified portfolio. Mutual funds and exchange-traded funds mentioned herein are not necessarily held in client portfolios. Data and statistics contained in this report are obtained from what we believe to be reliable sources; however, their accuracy, completeness or reliability cannot be guaranteed.

You may request a free copy of the firm’s Form ADV Part 2A, which describes, among other items, risk factors, strategies, affiliations, services offered and fees charged.

Past performance is not an indication of future returns. We do not provide legal or tax advice, nor sell insurance products. Tax, legal and insurance information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice, or as advice on whether to buy or surrender any insurance products. Always consult an attorney or tax professional, or licensed insurance professional regarding your specific legal or tax situation, or insurance needs.

© 2019 Adviser Investments, LLC. All Rights Reserved.