AboutJohn D Smith, CFP Expertise I can answer detailed questions regarding mutual fund investing, retirement planning, education planning and related financial planning/investment issues. I have a B.S. degree in Financial Planning & Counseling. I am also a Certified Financial Planner practitioner and have performed fee only investment management and financial planning services for the past 11 years.
Expert: John D Smith, CFP Date: 4/17/2006 Subject: Loss Distribution on Mutual Funds
Question Mr. Smith,
I know that mutual funds sometimes have losses.
1. Do they ever distribute those losses?
2. Can they distribute those losses?
3. If mutual funds do distribute losses, how can I find one that will do this?
Answer Actually, mutual funds are not allowed to distribute losses. They instead use these internal losses to offset gains they realize during rebalancing. Any unused losses remain with the portfolio until they can be used later. The only way to capitalize on losses from a mutual fund is to sell the actual fund shares at a price less than what you paid for them. I hope this helps.
