Financial Term Of The Day- “Tax-Efficient Fund”.

Posted on April 1, 2008
Filed Under Series - Financial Term Of The Day! |

financial term logo1 Tax-Efficient Fund : A mutual fund in which structure and operations are based on reducing the tax liability that its shareholders face. Reducing the tax liability of a fund is done in three main ways:

1. By purchasing tax-free (or low taxed) investments such as
municipal bonds.
2. Keeping the fund’s turnover low, especially if the fund invests in
stock. Stocks held for more than one year are taxed at a lower
long-term capital gains rate than short-term transactions.
3. Avoiding or limiting income-generating assets, such as
dividend-paying stocks, which create a tax liability at each
dividend issuance.

Related Read: What is a Mutual Fund?

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Comments

One Response to “Financial Term Of The Day- “Tax-Efficient Fund”.”

  1.   
    sai on August 6th, 2009 9:15 pm

    Please send me the financial term of the day

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