This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Index Funds That Can Beat the S&P 500

For investors in taxable accounts, the most likely way to beat the benchmark may be with (VMCAX) Vanguard Tax-Managed Capital Appreciation , which topped the S&P by a percentage point after taxes during the past decade.

Vanguard Tax-Managed tracks the Russell 1000, a close competitor of the S&P 500. But the Vanguard fund is not technically an index fund. The portfolio managers deviate slightly from their benchmark, using a variety of techniques to lower tax bills. For example, the fund sometimes sells downtrodden stocks, booking the losses, which can be used to offset taxable capital gains. The result is a fund that closely mimics its index while dodging the taxman.

By owning the tax-managed portfolio, shareholders should end up with more money in their pockets than if they had purchased a conventional S&P 500 fund.

Stan Luxenberg is a freelance writer who specializes in mutual funds and investing. He was formerly executive editor of Individual Investor magazine.
4 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
CSCO $27.92 0.00%
IWC $79.98 0.00%
MSFT $41.62 0.00%
RSP $81.57 0.00%
XOM $86.93 0.00%


DOW 17,826.30 -279.47 -1.54%
S&P 500 2,081.18 -23.81 -1.13%
NASDAQ 4,931.8150 -75.9760 -1.52%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs