Vanguard Takes Low-Key Approach to Calculating Tax Bite on Its Funds

The Vanguard Group announced a campaign on Monday to emphasize the after-tax returns of its mutual funds. But the low-key moves are likely to have little impact on the industry or on return-obsessed investors.

The effect of taxes on mutual fund returns has become a hot-button issue among fund companies, spawning a slew of so-called tax-efficient funds. Since April, a cursory review shows that American Century Investments, T. Rowe Price (TROW Quote), J.P. Morgan (JPM Quote), Prudential and Vanguard have either introduced or proposed new funds with tax-efficient themes.

Vanguard now promises to calculate tax-adjusted returns for its equity and balanced funds (47 of 103 total funds) and include them in the funds' annual reports to investors. After-tax returns will be calculated using the highest marginal rate, currently 39.6%, and the top capital-gains rate of 20%. ...