Vanguard Tax-Managed Small Cap (VTMSX) is a good choice for taxable accounts, according to Morningstar. It's down 0.9% this year, but has a 10-year average annual return rate of 7.6%.
Morningstar analyst David Falkof writes that "small-cap funds tend to have poor tax efficiency, as most managers eventually sell for a gain when successful stocks grow into larger companies. This fund, however, avoids paying out gains to shareholders as taxable events. Using a strategy called tax-harvesting, the fund gradually accumulates losses from underperforming holdings to offset future capital gains from better-performing names."Its strategy also includes trying to deter short-term investors whose redemptions could trigger taxable gains by maintaining a $10,000 minimum initial investment, said Morningstar, and "thus far, the fund has never paid a taxable gain." The fund's five- and 10-year tax-adjusted returns are better than 75% of its small-blend peers through October. The fund's top pick is Vanguard REIT Index ETF (VNQ), at 3% of the fund, followed by Regeneron Pharmaceuticals (REGN), which discovers, develops, and commercializes products that fight inflammation, cancer, and eye disease (it has gained 83% this year), and Healthspring (HS), a Medicare-focused managed-care organization, which is up 103% this year.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV