Tax-Efficient Vanguard Readies Some Big Cap-Gains Distributions

Brace for some big capital-gains distributions this year, folks, because even one of the most tax-efficient shops around is raising a red flag.

Vanguard, best-known for index investing and tax efficiency, announced Thursday that it expects five of its 54 stock and balanced funds to make capital-gains distributions at or above 10% of their share price -- larger than usual.

In its announcement, the firm rightly warns investors that buying shares of a stock just prior to its fiscal year-end can stick them with a tax bill on other investors' gains. (Of course, these distributions don't affect investors who own one of the funds through a tax-deferred account.) The warning comes on the heels of steep gains last year and mammoth distributions from several other companies' stock funds. ...