2025 Predictions
If you are here, you are wondering how painful this year’s capital gains distributions might be this season. Last season, I predicted we would see an average number of “large” distributions, and I was roughly correct. Specifically, I guessed we would see 359 funds with distributions higher than 10% of NAV; the actual number we found was 296. I’m the first to tell you that my numbers will be off each year, but I hope to be accurate in the direction of distributions (very high number, high, average, low, or very low number). So far, that’s been true.
To make each year’s prediction, I start by looking back:
Over the last 11 years, we’ve averaged 350 funds with distributions higher than 10% of NAV. As it turned out, last year’s number was slightly lower than average.
This year is shaping up to be very average again.
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 at a consistent pace. Mutual funds continue to see outflows.
- The numbers are pretty average for the fund companies that have already reported. Roughly a third of fund firms have already provided distribution estimates, and we see pretty typical numbers.
These reasons lead me to predict that the 2025 season will see 365 funds with capital gains distributions higher than 10%.
I firmly believe advisors and heavy mutual fund users should be gathering capital gains estimates in high, low, or average years. It’s your holdings that matter, not the averages. In my wealth management practice, this information has led to trades that have saved clients real money on their taxes. I hope it helps you as well.
