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Mutual Funds/Funds with tax favored yields.


Can you name some funds withn tax favored yields?Thanks!

Dear Randy--

An unusually tax-efficient fund, of course, would be any municipal bond fund. Its yield would be shielded from most taxes.
But in general, tax-efficient funds are those that don't buy and sell much. Index funds fit into this category--they trade only as often as they index they follow.
Some other funds, when they do sell for a profit, may take losses deliberately to offset the gains.
Of course, buying stocks that don't provide much in the way of dividends is another way to avoid taxes.  
Another way I might mention: buying funds that have low expenses.
The Vanguard Group is a leader in tax-efficient funds, in part because it manages so many index funds, and in part because its expenses are so low.

Here's a list of tax-efficient funds from Lipper, published a few years ago:

I hope this helps.


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Warren Boroson


Author of "Keys to Investing in Mutual Funds" (Barrons), "Ultimate Mutual Fund Guide" (Probus), "How to Pick Stocks Like Warren Buffett" (JKLasser), and "The Reverse Mortgage Advantage" (McGraw-Hill). Former financial columnist for Gannett News Service.


Author of 20 books; winner of 1996 Personal Finance award from Investment Company Institute and Washington University. Formerly on staffs of Money and Sylvia Porter's Magazine. Had a radio program (on WEVD) about mutual funds and a newsletter, FundDigest.

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