2024 Predictions
You have come to the right place if you are wondering how painful this year’s capital gains distributions might be this season. Last year, I predicted we would see a record-low number of “large” distributions, and I was correct. Specifically, I guessed we would see 80 funds with distributions higher than 10% of NAV; the actual number we found was 99.
To make the year’s prediction, I start by looking back:
In an average year, we’ve seen 356 funds with distributions higher than 10% of NAV. Last year’s number was an outlier.
This year looks very average.
There are three primary reasons I feel this way:
- The last 12 months have seen amazing returns for the stock and bond markets – There are capital gains out there.
- Fund outflows continue, but not at an unusual pace – Mutual funds continue to see outflows.
- Numbers are pretty average for the fund companies who have already reported – Roughly a third of fund firms have already provided distribution estimates, and we are seeing average numbers.
These reasons lead me to predict that the 2024 season will see 359 funds with capital gains distributions higher than 10%.
If you have read this far, be proud of yourself. I continue to be surprised by the number of advisors and personal investors who do not bother to do any capital gains distribution planning. After years of looking at how these numbers help my clients save money on their taxes, I’m convinced the planning is worth the effort.
