Taking advantage of bear market to move to more tax-efficient funds

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
Retired1809
Posts: 328
Joined: Fri Feb 23, 2007 4:11 pm
Location: North Carolina, USA

Taking advantage of bear market to move to more tax-efficient funds

Post by Retired1809 » Tue Mar 17, 2020 9:39 am

Many many years ago, I invested in HACAX. Harbor Capital Appreciation Fund in a non-retirement plan. The good news is that it has performed exceptionally well. The bad news is that it is not tax-efficient. My 1099-DIV shows a five figure taxable distribution in most years. I've procrastinated selling it and moving the money to a more tax-efficient Total Stock Market Index fund, but recent market weakness has me wondering why I don't go ahead and take the hit of long term capital gain now and reinvest in the Index fund. (I am able to sell HACAX and buy an equal amount of VTI (Total Stk Mkt Index) the same day.) And I am prepared to pay the income tax on the gain.

As part of my plan, I'm also considering identifying some of the lowest-basis shares and donating them to my Donor Advised Fund and selling only the remaining shares.

Your thoughts?

retired@50
Posts: 3049
Joined: Tue Oct 01, 2019 2:36 pm
Location: Living in the U.S.A.

Re: Taking advantage of bear market to move to more tax-efficient funds

Post by retired@50 » Tue Mar 17, 2020 10:06 am

If you can absorb the capital gain tax hit in 2020, I'd make the switch. It will feel as if you've removed a pebble from your shoe.

Regards,
This is one person's opinion. Nothing more.

Post Reply