Fidelity Spartan Total Market Capital Gains Distribution

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
Topic Author
markettracker
Posts: 63
Joined: Tue Jun 02, 2015 4:13 pm

Fidelity Spartan Total Market Capital Gains Distribution

Post by markettracker » Mon Dec 21, 2015 11:21 am

Does anyone know why Fidelity Spartan Total Market (FSTVX) had a capital gain distribution this year? It looks like this is the first time since 2010 they made one.

User avatar
JustinTime
Posts: 490
Joined: Wed Jul 01, 2015 6:52 pm

Re: Fidelity Spartan Total Market Capital Gains Distribution

Post by JustinTime » Mon Dec 21, 2015 11:26 am

No they have them every year: http://quotes.morningstar.com/chart/fun ... ture=en_US
markettracker wrote:Does anyone know why Fidelity Spartan Total Market (FSTVX) had a capital gain distribution this year? It looks like this is the first time since 2010 they made one.

Spirit Rider
Posts: 12249
Joined: Fri Mar 02, 2007 2:39 pm

Re: Fidelity Spartan Total Market Capital Gains Distribution

Post by Spirit Rider » Mon Dec 21, 2015 12:10 pm

JustinTime wrote:No they have them every year: http://quotes.morningstar.com/chart/fun ... ture=en_US
markettracker wrote:Does anyone know why Fidelity Spartan Total Market (FSTVX) had a capital gain distribution this year? It looks like this is the first time since 2010 they made one.
That is not correct. They have had dividends every year, but like the OP stated, they have not had capital gains since 2010.

The likely reason for this is because we have had a minor correction this year following five years of significant gains. Typically, when this happens the nervous Nellies bump up redemptions. Then two things happen; First, the redemptions require selling highly appreciated stock. Second, they probably have used up their carry-forwarded losses from 2007-2009. Net result, capital gains distribution.

livesoft
Posts: 69598
Joined: Thu Mar 01, 2007 8:00 pm

Re: Fidelity Spartan Total Market Capital Gains Distribution

Post by livesoft » Mon Dec 21, 2015 2:36 pm

Fidelity Spartan funds seem to have more capital gains distributions than the corresponding Vanguard index funds.

Even FSUVX (S&P500 index fund) had a cap gain distribution this year. What's up with that?

Why? I don't think we will ever know unless Fidelity writes up why they did it. Perhaps they do derivatives, lending, options, trading, etc in the hopes of skimming off some profits to help keep themselves in business. If a member of the index is bought out by another company or is booted out from the index, then that company's shares will probably be sold which could create cap gains to be distributed.

But who knows?
Last edited by livesoft on Mon Dec 21, 2015 2:40 pm, edited 1 time in total.
Wiki This signature message sponsored by sscritic: Learn to fish.

User avatar
Toons
Posts: 13426
Joined: Fri Nov 21, 2008 10:20 am
Location: Hills of Tennessee

Re: Fidelity Spartan Total Market Capital Gains Distribution

Post by Toons » Mon Dec 21, 2015 2:38 pm

Profit taking after the considerable market run the last 6 years :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

User avatar
ogd
Posts: 4875
Joined: Thu Jun 14, 2012 11:43 pm

Re: Fidelity Spartan Total Market Capital Gains Distribution

Post by ogd » Mon Dec 21, 2015 2:57 pm

livesoft wrote:Fidelity Spartan funds seem to have more capital gains distributions than the corresponding Vanguard index funds.

Even FSUVX (S&P500 index fund) had a cap gain distribution this year. What's up with that?

Why? I don't think we will ever know unless Fidelity writes up why they did it. Perhaps they do derivatives, lending, options, trading, etc in the hopes of skimming off some profits to help keep themselves in business. If a member of the index is bought out by another company or is booted out from the index, then that company's shares will probably be sold which could create cap gains to be distributed.

But who knows?
The dual structure of Vanguard funds (ETF - MF) is what allows them to eliminate virtually all cap gains distributions. Fidelity doesn't have this, so even the trickle of index turnover (and presumably more shareholder caused "turnover") will eventually catch up with them.

Still much better than active funds though.

User avatar
DonCamillo
Posts: 1033
Joined: Tue Nov 26, 2013 10:27 pm
Location: Northern New Jersey

Re: Fidelity Spartan Total Market Capital Gains Distribution

Post by DonCamillo » Mon Dec 21, 2015 3:06 pm

Fidelity Spartan Extended Market Index Fund (FSEVX) was not a good choice for my taxable account this year. I have a reduction in market value, a big dividend, and a very big long term capital gain dividend. I really prefer the tax friendliness of my Vanguard index funds. So much for a tilt to small caps. :oops:
Les vieillards aiment à donner de bons préceptes, pour se consoler de n'être plus en état de donner de mauvais exemples. | (François, duc de La Rochefoucauld, maxim 93)

ThisTimeItsDifferent
Posts: 247
Joined: Sat Jan 31, 2015 2:51 pm

Re: Fidelity Spartan Total Market Capital Gains Distribution

Post by ThisTimeItsDifferent » Mon Dec 21, 2015 3:32 pm

ogd wrote: The dual structure of Vanguard funds (ETF - MF) is what allows them to eliminate virtually all cap gains distributions. Fidelity doesn't have this, so even the trickle of index turnover (and presumably more shareholder caused "turnover") will eventually catch up with them.

Still much better than active funds though.
No kidding. My long term T Rowe Price Equity Income PRFDX and Small Cap Value PRSVX had distributions of 5-20% of total value this year.

Good time to TLH. PRSVX has a 1% redemption fee on shares held less than 90 days though; but I don't know whether that applies to reinvested distributions.

User avatar
tfb
Posts: 8191
Joined: Mon Feb 19, 2007 5:46 pm
Contact:

Re: Fidelity Spartan Total Market Capital Gains Distribution

Post by tfb » Mon Dec 21, 2015 5:04 pm

markettracker wrote:Does anyone know why Fidelity Spartan Total Market (FSTVX) had a capital gain distribution this year? It looks like this is the first time since 2010 they made one.
The fund incurred capital gains when it sold some positions.

Capital Gains History
Date Per Share Amount Reinvestment Price
12/18/15 $0.313 $57.55

Only slightly more than 0.5% in gains. Not a big deal.
Harry Sit, taking a break from the forums.

Call_Me_Op
Posts: 7427
Joined: Mon Sep 07, 2009 2:57 pm
Location: Milky Way

Re: Fidelity Spartan Total Market Capital Gains Distribution

Post by Call_Me_Op » Tue Dec 22, 2015 6:55 am

Toons wrote:Profit taking after the considerable market run the last 6 years :happy
This is an index fund. They shouldn't be selling stocks to take profits.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein

User avatar
Toons
Posts: 13426
Joined: Fri Nov 21, 2008 10:20 am
Location: Hills of Tennessee

Re: Fidelity Spartan Total Market Capital Gains Distribution

Post by Toons » Tue Dec 22, 2015 7:04 am

Call_Me_Op wrote:
Toons wrote:Profit taking after the considerable market run the last 6 years :happy
This is an index fund. They shouldn't be selling stocks to take profits.

Thank You.
I stand corrected
And Learned :happy
"Index funds do realize gains whenever a stock is replaced in a target index and must therefore by sold by the fund. An index fund will also be forced to sell securities in its portfolio if many investors decide to sell their shares."

http://www.fool.com/School/MutualFunds/Costs/Taxes.htm
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

Call_Me_Op
Posts: 7427
Joined: Mon Sep 07, 2009 2:57 pm
Location: Milky Way

Re: Fidelity Spartan Total Market Capital Gains Distribution

Post by Call_Me_Op » Tue Dec 22, 2015 7:33 am

Usually, some cash is kept on-hand to satisfy redemptions. There are always extreme cases, of course.

Distributed capital gains from index funds can be large in some cases. For example, Fidelity's Spartan Extended Market Index Advantage Class made a long-term capital gain distribution of a few percent. I assume that this was due to the 13% turn-over of the index.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein

User avatar
Doc
Posts: 9304
Joined: Sat Feb 24, 2007 1:10 pm
Location: Two left turns from Larry

Re: Fidelity Spartan Total Market Capital Gains Distribution

Post by Doc » Tue Dec 22, 2015 9:37 am

Schwab S&P 500 Index Fund SWPPX has not had a cap gain distribution from 2006 through 2014. For 2015 Schwab is estimating a LTCG distribution of some 1.04%.

I didn't try to determine if the index changed and they had to sell something that was removed from the index or they had larger net redemptions then they could handle with dividend income. Perhaps it's both.

Looking at other S&P index fund's distributions might give some information. (Vanguard's ETF share class negates using Vg as an example.)
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.

User avatar
Artsdoctor
Posts: 4193
Joined: Thu Jun 28, 2012 3:09 pm
Location: Los Angeles, CA

Re: Fidelity Spartan Total Market Capital Gains Distribution

Post by Artsdoctor » Tue Dec 22, 2015 10:22 am

I was also surprised to the long-term CG distribution.

All's not lost. Remember that you can use your carryover losses to offset long-term capital gains distributions from mutual funds and ETFs. (Unfortunately, that is not the case with short-term CG distributions . . . )

User avatar
House Blend
Posts: 4653
Joined: Fri May 04, 2007 1:02 pm

Re: Fidelity Spartan Total Market Capital Gains Distribution

Post by House Blend » Tue Dec 22, 2015 2:03 pm

ogd wrote:The dual structure of Vanguard funds (ETF - MF) is what allows them to eliminate virtually all cap gains distributions. Fidelity doesn't have this, so even the trickle of index turnover (and presumably more shareholder caused "turnover") will eventually catch up with them.
This.

IMO this dual structure, leading to the ability to siphon off capital gains, is what puts Vanguard at the top of the index mutual fund heap. (The low ERs are pretty nice too.)

For another point of comparison, let me mention the TIAA-CREF Equity Index Fund. It tracks the Russell 3000, and the Institutional share class has an ER of 0.05%. I keep track of it because I own it in my tax-advantaged employer's plan.

This fund does have a Retail share class, but iin any case the managers seem to be unable to avoid realizing gains. Each of the last 4 years, it has distributed capital gains. Mostly on the order of 0.5%, and sometimes with a dollop of ST gains. This year, it distributed 1.2% in LTCG.

User avatar
Artsdoctor
Posts: 4193
Joined: Thu Jun 28, 2012 3:09 pm
Location: Los Angeles, CA

Re: Fidelity Spartan Total Market Capital Gains Distribution

Post by Artsdoctor » Tue Dec 22, 2015 3:29 pm

House Blend,

I'm hoping that TIAA-CREF is primarily being used for tax-advantaged accounts.

You figure that a Total Stock Market fund is going to be one of the major building blocks of most investors' portfolios, and those capital gains distributions you're describing would be just wasted money in a taxable account when there are so many vastly superior products (related to tax efficiency).

Post Reply