Working Paper: NBER ID: w15327
Authors: Clemens Sialm; Laura Starks
Abstract: Mutual funds are pooled investment vehicles with diverse tax clienteles. Whereas many mutual funds are held primarily by taxable investors, a significant fraction of mutual fund assets are held in tax-qualified retirement accounts. Our paper investigates whether the characteristics, investment strategies, and performance of mutual funds held by diverse tax clienteles differ. Examining both mutual fund income distributions and mutual fund holdings, we find that funds held primarily by taxable investors tend to be more tax-efficient than funds held primarily in tax-deferred retirement accounts. Despite these differences, we find no evidence that any investment constraints that may arise from the funds that pursue tax efficient management strategies result in performance differences between funds held by different tax clienteles.
Keywords: No keywords provided
JEL Codes: G11; G12; G23; G35; H24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| mutual funds held primarily by taxable investors (G23) | tax efficiency (H21) |
| proportion of defined contribution assets (G23) | capital gain distributions (G35) |
| proportion of defined contribution assets (G23) | tax efficiency (H21) |
| tax status of clientele (H20) | fund strategies (G23) |
| 2003 tax reforms (H20) | mutual fund strategies (G23) |
| tax status of clientele (H20) | capital gain distributions (G35) |