5 Mutual Fund and ETF Red Flags
Regency Wealth Management partner, Mark Andraos, was recently featured in a U.S. News & World Report article titled “5 Mutual Fund and ETF Red Flags.”
In the article, Andraos discussed a subtle but costly pitfall for mutual fund investors: embedded capital gains. “While this is not a new concept, a fund with stellar historical performance and subsequent underperformance is typically a victim of high embedded capital gains,” he said.
It’s a reminder that strong past performance doesn’t always translate to a smart buy today. “Strong historical performance plus significant recent outflows is usually a recipe for a hefty tax liability,” Andraos noted. “If you buy into a mutual fund that fits this profile, you’re potentially paying taxes tomorrow for someone’s gains yesterday.”
Read the full article to learn more about potential red flags in mutual fund and ETF investing.
This article and the quotation included is not intended as investment advice, nor should it be construed as a recommendation to buy or sell any securities by Regency Wealth Management or its employees. The author does not guarantee the accuracy or completeness of the information presented and strongly advises investors to conduct their own research and consult with a qualified financial advisor before making any investment decisions. Investing in stocks involves risks, including the potential loss of principal.
Regency Wealth Management is a SEC Registered Investment Advisor managing over $500 million for families and small institutional investors. Regency was founded in 2004, is headquartered in New Jersey, and serves clients across the country.