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Question regarding mutual fund performance

Posted on 5/16/13 at 11:29 am

Posted by jimbeam

University of LSU

Member since Oct 2011

75703 posts

Posted on 5/16/13 at 11:29 am

I've been looking into Vanguard funds to start my retirement funding and I have a question.

When looking at the price and performance of each fund, i'm confused. Why such a large jump when including 'sale of fund shares'?

For example- VSEQX
Returns before taxes- 18.46%
Returns after taxes on distributions- 18.17%
Returns after taxes on distributions and sale of fund shares- 10.90%

Are you really only making 10.9% on this fund? Can someone explain this to me please?

Thanks from a total noob.

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Posted by CHSBears

Baton Rouge

Member since Aug 2007

778 posts

Posted on 5/16/13 at 11:54 am to jimbeam

They use the highest marginal tax rate in effect at the time. Could be quite high considering what went into law for 1/1/13. They also only consider federal taxes; ordinary income, qualified dividends, short term gains & long term gains.

2013 Highest marginal rate is 39.6% plus surcharge of 3.8% for a total of 43.4%. So just to ballpark, they look correct.

This post was edited on 5/16/13 at 11:59 am

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Posted by jimbeam

University of LSU

Member since Oct 2011

75703 posts

Posted on 5/16/13 at 2:35 pm to CHSBears