Why do investors buy tax-managed funds?
A. Often, one of the major goals of investing is growing that investment over the long term. To accomplish this, investors look for ways to minimize erosion of that nest egg from inflation, adverse market conditions, bad investment decisions and tax liabilities. “Unless you have an employer match, you can sometimes be better off in index funds or tax-managed funds than in your 401(k),” says Bullard. And the investment has to make sense, apart from the tax-managed status. “You have to keep in mind that you shouldn’t be totally driven by taxes — it’s just one area,” says Altfest.
