High Yearend Distributions

yogibearbull

@TheShadow has an annual thread on fund distribution links.

This thread is to note mutual funds/OEFs that have outrageously high yearend distributions. Culprits are high outflows and/or recent manager changes (new managers want to start with fresh portfolios for their tenure).

This problem isn't significant for ETFs, but those too can have notable CG distributions when there are heavy outflows (their advantage of "in-kind trading without tax impact" basically runs out). Vanguard's dual OEF and ETF class structure also bites because both VG OEFs and VG ETFs have identical CG distributions (as % of prices).

M* RK has noted 3, https://www.morningstar.com/funds/3-funds-whose-tax-bills-might-tick-up

AKREX, outflow 9.2% of AUM

VPMAX, outflow 6.8% of AUM

DHSCX, outflows and manager change, 03/2023 (from the link at @TheShadow, est 21.65%!)

Too early for the amounts of CG distributions.

Posters should add more as they learn about large ( > 5%) yearend CG distributions.

sfnative

All of the Primecap Odyssey funds, which are in multi-year outflow mode, are distributing over 5%. (Looks like the Growth fund is doling out almost 12%, which comes on top of bottom quartile 5-yr. relative performance in its category, so no surprise people are exiting.)

Observant1

ISTR that many Primecap managed funds have distributed sizable capital gains in the past.
These funds tend to have very low turnover for active funds so excessive turnover is not an issue.
It's probably best to hold Primecap funds outside of taxable accounts.

yogibearbull

For TIAA-CREF (T-C) funds,

T-C G&I TIGRX / TRGIX 18.42% / 17.90%
T-C LC Value TRLIX / TRLCX 5.95% / 5.98%

Following are not large but notable for index funds.
T-C LC Value Index TILVX / TRCVX 2.52% / 2.47%
T-C SC Blend Index TISBX / TRBIX 1.46% / 1.46%
T-C LC Growth Index TILIX / TRIRX 1.27% / 1.26%

A common theme of these index funds is the use of Russell indexes that aren't selective and reconstitute in a poor way (all on a preannounced day).

yogibearbull

And the list grows,
https://www.morningstar.com/funds/which-popular-funds-will-hit-investors-with-big-capital-gains-distributions-this-year

BaluBalu

Pl post large distributions from ETFs as well.

Observant1

Outflows were significant for many funds with the largest estimated capital gains distributions.

"Diamond Hill Small Cap Fund DHSCX will likely make a whopping 23% distribution. In the 12 months ending in September, the fund’s assets have shrunk by nearly 25% owing to outflows."

"Delaware Ivy Value IYVAX has suffered outflows of almost 50% this year, which has contributed to almost a 30% estimated distribution."

"Two Federated Hermes strategies, Federated Hermes Kaufmann Large Cap KLCKX and Federated Hermes Max Cap Index FMXKX, will likely distribute roughly 25% in capital gains. Federated Hermes Kaufmann large Cap has seen an estimated 22% of its assets leave as outflows so far in 2023."

"Ironically, J.P. Morgan Tax Aware Equity JPDEX will likely distribute at least 20%; the $828 million in assets fund has seen more than $240 million in outflows in 2023."

TheShadow

Invesco has several funds, eleven, making distributions in excess of 5%.

STSCX is paying a large distribution.

Derf

Anyone have any ideas where all the out-flow went ? Tbills & note is my guess.

TheShadow

DWS Equity 500 Index Fund is paying a 20% total gain distribution.

yogibearbull

Wow!

DWS Equity 500 Index Fund I-class BTIIX AUM history from Fido,
https://fundresearch.fidelity.com/mutual-funds/view-all/25159R106

2021 $317.87 million
2022 $217.82 million
2023 $101.87 million

M* is showing 2023 AUM in ALL classes as $338.6 million,
https://www.morningstar.com/funds/xnas/btiix/quote

BTIIX ER is 20 bps net, 30 bps gross - too high when one can buy cheap ETFs IVV, VOO, SPLG, SPY.

So, with severe outflows, index funds can have huge CG distributions.

Observant1

Wow, that's a huge capital gains distribution for an index fund!
Why hold BTIIX when you can track the S&P 500 for 5 bps or less?

TheShadow

BNY Mellon Institutional S&P 500 Stock Index Fund is paying a total distribution of 19.7%.

yogibearbull

PEOPX / DSPIX (ER 50/21 bps) CG distribution looks strange.

Its high outflows were in 2022. 2023 to 9/30/23 looks OK asset-wise. So, there must be huge turnover or churn to cause that high CG distribution in 2023 (or, is that data from last year?). Fido data on combined AUM:
2021 $5.76 billion
2022 $3.91 billion
2023 $3.89 billion

BoNY/Mellon has a storied history as among the 1st bank in the US (and Alexander Hamilton was among its founders). But who pays ER of 50/21 bps for SP500 index?

msf

PEOPX and DSPIX are two different funds, not two share classes of the same fund. PEOPX is projected to distribute "just" 5.7% of NAV.

Useless trivia: PEOPX ticker comes from the Dreyfus fund's old (1990s) name: People's Index Fund. (A fund for the people? Your guess is as good as mine.)

yogibearbull

So, I shouldn't have added the AUMs from Fido (I thought I was simplifying things). Here are those as separate:

PEOPX, ER 50 bps
2021 $2.57 billion
2022 $1.87 billion
2023 $1.99 billion

DSPIX, ER 21 bps
2021 $3.20 billion
2022 $2.04 billion
2023 $1.90 billion

That doesn't change the fact that 2022 was a huge outflow year, but 2023 in so-so.

BaluBalu

yogibearbull said:

So, I shouldn't have added the AUMs from Fido (I thought I was simplifying things). Here are those as separate:

PEOPX, ER 50 bps
2021 $2.57 billion
2022 $1.87 billion
2023 $1.99 billion

DSPIX, ER 21 bps
2021 $3.20 billion
2022 $2.04 billion
2023 $1.90 billion

That doesn't change the fact that 2022 was a huge outflow year, but 2023 in so-so.

Not sure what extra info I got from this post. I got more from the earlier post where more information was packed into a smaller post which took less time to digest and was more efficient for me. Please continue the style of the earlier post. Members can always ask questions if they need more detail or they can go do further research on their own.

TheShadow

Forgot to include BNY Mellon U.S. Equity Fund with a estimated total distribution of 38.6%.

The STSCX distribution is expected to be $16.675 plus a small STCG. The closing price on 9/29 was $52.79 so the estimated distribution would be an estimated 31.72%.

WABAC

msf said:

PEOPX and DSPIX are two different funds, not two share classes of the same fund. PEOPX is projected to distribute "just" 5.7% of NAV.

Useless trivia: PEOPX ticker comes from the Dreyfus fund's old (1990s) name: People's Index Fund. (A fund for the people? Your guess is as good as mine.)

Google books search will dig up old copies of Kiplingers for info like this.

TheShadow

BlackRock U.S. Insights Long/Short Equity Fund is between 7.5% - 8% income distribution.

TheShadow

Check out State Street S&P 500 Index Fund - Class N.

msf

Don't know about its estimated distributions, but SSgA's S&P 500 fund (SVSPX) carries a 12b-1 fee that rounds to 6 basis points (total ER of 16 basis points):

The Fund has adopted a distribution plan under Rule 12b-1 pursuant to which payments of up to 0.25% of average daily net assets may be made; however, the Fund’s Board of Trustees has determined that payments will not exceed 0.062% of average daily net assets

Prospectus: https://www.ssga.com/us/en/individual/mf/resources/doc-viewer#svspx&prospectus

yogibearbull

@Observant1 mentioned this high CG distribution earlier - JPEAX, JPECX, JPDEX, JPELX (AUM $853 million)

How can things go so wrong in a "Tax Aware" fund? Of course, heavy redemptions and/or manager incompetence.

JPM is also mad and is just shutting down the fund, TwitterLINK
https://www.sec.gov/Archives/edgar/data/1217286/000119312523277672/d372772d497.htm

Edit/Add. Looking at fund data for JPDEX from Fido and M*, this Fund has been in redemption for years, and has distributed large CGs before. So, the question is, what took JPM so long to kill it?
https://fundresearch.fidelity.com/mutual-funds/view-all/4812A1654
https://www.morningstar.com/funds/xnas/jpdex/performance

TheShadow

A couple of the AQR funds will make distributions of 10% or more.

yogibearbull

M* has a list of ETFs paying high CG distributions in 2023. They are expected to be tax-efficient but sometimes that doesn't work - very high outflows, illiquid areas, etc.
https://www.morningstar.com/etfs/few-etfs-are-paying-out-capital-gains-2023

TheShadow

Poster LewisBraham also had a recent article in the WSJ about funds with large distribution amounts.

yogibearbull

@LewisBraham noted IYVAX, KLCKX, FMXKX, CREEX, DHSCX, JPDEX (tax-aware!), BTIIX (SP500!) in the 11/27/23 issue of Barron's.

TheShadow

@yogibearbull

The funds you listed are the same as in the WSJ. I am not surprised due to the relationship between WSJ and Barron's.

yogibearbull

PFIX - Simplify Rate Hedge ETF

New Year brings new records. Looks like this ETF made an almost 50% distribution at the yearend.

https://twitter.com/syouth1/status/1742001236923015317
https://finance.yahoo.com/quote/PFIX/history?p=PFIX
https://stockcharts.com/h-perf/ui?s=PFIX&compare=_PFIX&id=p45804732157