BRSIX - 20% distribution

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
mrnutty
Posts: 22
Joined: Sat Dec 01, 2007 12:03 pm

BRSIX - 20% distribution

Post by mrnutty » Mon Dec 17, 2012 4:50 pm

A heads up to anyone who owns BRSIX (Bridgeway Microcap) in a taxable account. The fund is estimated to distribute $2.85 (mostly LT capital gains) on 12/21; almost 20% of NAV.

http://www.bridgewayfund.com/mf/performance/distributions.html

User avatar
indexfundfan
Posts: 1918
Joined: Tue Feb 20, 2007 11:21 am
Contact:

Re: BRSIX - 20% distribution

Post by indexfundfan » Mon Dec 17, 2012 6:15 pm

20% is huge.

Is this tax-gain harvesting by the fund?
My signature has been deleted.

Alan S.
Posts: 6915
Joined: Mon May 16, 2011 6:07 pm
Location: Prescott, AZ

Re: BRSIX - 20% distribution

Post by Alan S. » Mon Dec 17, 2012 6:59 pm

Included in the link is this fund's great 89.64% tax efficiency as of 12/31/2011. Check back soon to see what this figure drops to as of 12/31/2012.

If the fund harvested gains, so do the shareholders. :idea:

livesoft
Posts: 56632
Joined: Thu Mar 01, 2007 8:00 pm

Re: BRSIX - 20% distribution

Post by livesoft » Mon Dec 17, 2012 7:16 pm

I'm gonna bet somebody lunch that there will be a thread next week about "OMG! BRSIX dropped 20% in ONE day! Anybody else bailing out?"

However, it might present a very nice tax-loss harvesting move for 2012. :)
This signature message sponsored by sscritic: Learn to fish.

stlutz
Posts: 4018
Joined: Fri Jan 02, 2009 1:08 am

Re: BRSIX - 20% distribution

Post by stlutz » Mon Dec 17, 2012 11:39 pm

So I guess we should all hurry, buy the fund today, take the long-term capital gains at the 15% rate, then sell shortly thereafter and deduct the loss as the short-term rate...

User avatar
indexfundfan
Posts: 1918
Joined: Tue Feb 20, 2007 11:21 am
Contact:

Re: BRSIX - 20% distribution

Post by indexfundfan » Mon Dec 17, 2012 11:46 pm

stlutz wrote:So I guess we should all hurry, buy the fund today, take the long-term capital gains at the 15% rate, then sell shortly thereafter and deduct the loss as the short-term rate...

I was trying to think of any regulation that prevents someone from doing the above but couldn't think of any off the top of my head.

As long as the sale of BRSIX is at least a month after the purchase date, could this convert a LTCG in 2012 to a more valuable ST capital loss for 2013 (assuming the ultrasmall market does not fluctuate too much)?
My signature has been deleted.

STC
Posts: 415
Joined: Wed Nov 14, 2012 9:22 am

Re: BRSIX - 20% distribution

Post by STC » Tue Dec 18, 2012 6:01 am

So you would capture the spread between current and future LTG rates * the distribution. If future LTG are 20% as currently planned, then: 20% distribution * 5% spread = 1% benefit. Given the volatility, I don't think this is a free lunch plan...

Wagnerjb
Posts: 7017
Joined: Mon Feb 19, 2007 8:44 pm
Location: Houston, Texas

Re: BRSIX - 20% distribution

Post by Wagnerjb » Tue Dec 18, 2012 9:08 am

STC wrote:So you would capture the spread between current and future LTG rates * the distribution. If future LTG are 20% as currently planned, then: 20% distribution * 5% spread = 1% benefit. Given the volatility, I don't think this is a free lunch plan...


I could see two other scenarios:

1) You are in the 0% capital gain category this year, and will have more income next year...putting you in the 20% category.

2) You don't have taxable investments producing capital gains. So, the gain from BRSIX this year costs you 15%. The loss next year saves you tax at your ordinary income rate. (If the loss is greater than $3,000 the loss saves you ordinary taxes over multiple years).

Best wishes.
Andy

Indicing
Posts: 98
Joined: Sun Jan 20, 2008 9:26 pm

Re: BRSIX - 20% distribution

Post by Indicing » Tue Dec 18, 2012 8:19 pm

Two questions:

1) If I automatically reinvest these distributions, and then sell shares afterwards, will part of the TLH generated be considered a wash?

2) If BRSIX is becoming this tax-inefficient, then is it better to purchase it in a tax-sheltered account even if there is extra purchasing fee?

Thanks!

Alan S.
Posts: 6915
Joined: Mon May 16, 2011 6:07 pm
Location: Prescott, AZ

Re: BRSIX - 20% distribution

Post by Alan S. » Tue Dec 18, 2012 10:25 pm

indexfundfan wrote:
stlutz wrote:So I guess we should all hurry, buy the fund today, take the long-term capital gains at the 15% rate, then sell shortly thereafter and deduct the loss as the short-term rate...

I was trying to think of any regulation that prevents someone from doing the above but couldn't think of any off the top of my head.

As long as the sale of BRSIX is at least a month after the purchase date, could this convert a LTCG in 2012 to a more valuable ST capital loss for 2013 (assuming the ultrasmall market does not fluctuate too much)?


Here is a copy of the rule you were thinking of from Pub 550, p 57:

Loss on mutual fund or REIT stock held 6
months or less. If you hold stock in a mutual
fund (or other regulated investment company)
or real estate investment trust (REIT) for 6
months or less and then sell it at a loss (other
than under a periodic liquidation plan), special
rules may apply.
Capital gain distributions received. The
loss (after reduction for any exempt-interest dividends
you received, as explained later) is treated
as a long-term capital loss up to the total of
any capital gain distributions you received and
your share of any undistributed capital gains.
Any remaining loss is short-term capital loss.


If you don't meet the 6 month holding period, much of the loss would therefore be LT, not ST

User avatar
grabiner
Advisory Board
Posts: 20877
Joined: Tue Feb 20, 2007 11:58 pm
Location: Columbia, MD

Re: BRSIX - 20% distribution

Post by grabiner » Tue Dec 18, 2012 10:37 pm

Indicing wrote:1) If I automatically reinvest these distributions, and then sell shares afterwards, will part of the TLH generated be considered a wash?


A reinvest is considered a purchase. Thus, if you sell shares within 30 days after the dividend, it will be a wash sale (unless you sell the shares you used to purchase the dividend.)

2) If BRSIX is becoming this tax-inefficient, then is it better to purchase it in a tax-sheltered account even if there is extra purchasing fee?


The other alternative would be to use a micro-cap ETF such as IWC (iShares Russell Microcap) or WMCR (Wilshire Microcap); these are more likely to be tax-efficient because of the ETF structure. WMCR has an even lower cap than BRSIX.

Also near the micro-cap range is RZV (Guggenheim S&P 600 Pure Value); while this isn't technically a micro-cap fund, it's 79% micro-cap according to Morningstar, because the pure value stocks in the S&P 600 are among the smallest. (It's also a deep value fund.)
David Grabiner

palpatine242
Posts: 6
Joined: Fri Aug 01, 2008 3:40 pm

Re: BRSIX - 20% distribution

Post by palpatine242 » Mon Dec 24, 2012 1:12 am

I have shares of BRSIX in a taxable account. Shares were all purchased more than 31 days before the distribution on 12/21, but some of the shares were purchased within 6 months of the distribution. Dividends and capital gains are both set to reinvest. I have never done Tax Loss Harvesting before and am a bit confused. Can I sell all of my shares and use the loss to offset the taxes that I will have to pay on the distribution? Could someone please explain in more detail the 6 month rule that was referred to earlier in this thread? I am in a high marginal tax rate if that makes a difference.

I really don't like that BRSIX is giving me a large, taxable distribution in a taxable account. However, I have never found an equivalent ETF for US microcaps. I generally go by the DFA vs Vanguard site's recommendations. Can anyone offer a reasonable alternative for US microcaps?

Thank you very much for your help.

User avatar
Noobvestor
Posts: 4487
Joined: Mon Aug 23, 2010 1:09 am
Contact:

Re: BRSIX - 20% distribution

Post by Noobvestor » Mon Dec 24, 2012 2:13 am

palpatine242 wrote:I have shares of BRSIX in a taxable account. Shares were all purchased more than 31 days before the distribution on 12/21, but some of the shares were purchased within 6 months of the distribution. Dividends and capital gains are both set to reinvest. I have never done Tax Loss Harvesting before and am a bit confused. Can I sell all of my shares and use the loss to offset the taxes that I will have to pay on the distribution? Could someone please explain in more detail the 6 month rule that was referred to earlier in this thread? I am in a high marginal tax rate if that makes a difference.

I really don't like that BRSIX is giving me a large, taxable distribution in a taxable account. However, I have never found an equivalent ETF for US microcaps. I generally go by the DFA vs Vanguard site's recommendations. Can anyone offer a reasonable alternative for US microcaps?

Thank you very much for your help.


I wouldn't hold microcap in taxable. My alternative would be to not hold it at all.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe

User avatar
grabiner
Advisory Board
Posts: 20877
Joined: Tue Feb 20, 2007 11:58 pm
Location: Columbia, MD

Re: BRSIX - 20% distribution

Post by grabiner » Mon Dec 24, 2012 10:12 am

palpatine242 wrote:I have shares of BRSIX in a taxable account. Shares were all purchased more than 31 days before the distribution on 12/21, but some of the shares were purchased within 6 months of the distribution. Dividends and capital gains are both set to reinvest. I have never done Tax Loss Harvesting before and am a bit confused. Can I sell all of my shares and use the loss to offset the taxes that I will have to pay on the distribution?


There are two separate rules involved.

Wash sale: If you sell shares at a loss, and buy replacement shares within 30 days before or after selling at a loss, you cannot deduct the loss on the shares you replaced until you sell the replacement shares. You can avoid a wash sale by selling the shares you bought with reinvested dividends and capital gains on 12/21; you won't then have any replacement shares.

6-month rule: If a share distributes long-term capital gains, and you sell the share for a loss within 6 months of buying it, a loss equal to the long-term gain is taxed as a long-term loss rather than a short-term loss. However, this usually won't make a difference; short-term losses only have an advantage over long-term losses if you have both short-term and long-term gains in the same year and not enough assets to offset both.

I am in a high marginal tax rate if that makes a difference.


This may make a difference in whether you should take the loss in 2012 or 2013. If you have a $6000 capital gain now, and sell for a $6000 loss in 2012, the gain and loss will cancel out and you will owe no tax on the gain. If you wait until 2013 to sell for the $6000 loss, you will pay tax on the $6000 gain in 2012, but you will have a $6000 loss which you can take off your ordinary income at $3000 a year or offset any gains you have then. If you are in a 33% tax bracket, then waiting until 2013 to sell for the loss means that you will pay $900 in tax in 2012, but get back $990 on a $3000 loss in 2013 and $990 more in 2014 if you don't have any more gains.

Check your state taxes as well; some states do not allow capital losses to be deducted against ordinary income. In NJ, for example, losses can only be deducted against gains in the same year.
David Grabiner

User avatar
Steve Thorpe
Posts: 189
Joined: Mon Oct 15, 2007 1:26 pm
Location: Durham, NC

Re: BRSIX - 20% distribution

Post by Steve Thorpe » Mon Jan 14, 2013 12:41 am

Hello Bogleheads,

FYI I just posted some analysis I did on BRSIX to a different topic. Thought you might also appreciate it so will share the link here: http://www.bogleheads.org/forum/viewtopic.php?f=1&t=107927&p=1582788#p1582788

Best wishes.
Steve Thorpe

User avatar
kramer
Posts: 1556
Joined: Wed Feb 21, 2007 2:28 am
Location: Philippines

Re: BRSIX - 20% distribution

Post by kramer » Fri Nov 15, 2013 5:19 am

Here is the list of expected 2013 Bridgeway fund distributions:

http://bridgeway_web.s3.amazonaws.com/c ... imates.pdf

I am not sure what date the estimates were created.

The estimated long term capital gains distribution for BRSIX is $1.828 which is about a 10.35% distribution at the current price.

berntson
Posts: 1366
Joined: Mon Oct 29, 2012 12:10 pm

Re: BRSIX - 20% distribution

Post by berntson » Fri Nov 15, 2013 8:49 am

I wish that there were a BRSIX equivalent that wasn't tax managed. Holding BRSIX in a taxable account is a bad idea to start with. For those who hold it in a tax deferred account, the tax management merely increases the tracking error relative to DECILE10.

A question: I've been planning to add a 5% BRSIX allocation to our portfolio (in tax-advantaged space) in the next two months. How should the distribution effect the timing of this purchase? Is there any reason to put it off?

User avatar
kramer
Posts: 1556
Joined: Wed Feb 21, 2007 2:28 am
Location: Philippines

Re: BRSIX - 20% distribution

Post by kramer » Wed Nov 12, 2014 1:34 am

It looks like another big distribution by BRSIX this year. Bridgeway funds just posted their 2014 estimated distributions:

http://bridgeway_web.s3.amazonaws.com/c ... imates.pdf

Projected long term capital gains distribution for BRSIX is $1.96. Current market price is $17.16 so that is about a 11.4% of NAV distribution.

YTD, BRSIX is up 0.94%.

User avatar
White Coat Investor
Posts: 12854
Joined: Fri Mar 02, 2007 9:11 pm
Location: Greatest Snow On Earth

Re: BRSIX - 20% distribution

Post by White Coat Investor » Wed Nov 12, 2014 2:45 am

I hold mine in a Roth. If I could get a higher pre-tax total return by using a non-tax managed fund, I would do so. How much return do you suppose the tax management is costing me? I can't imagine it's much if the distributions are this large.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

User avatar
kramer
Posts: 1556
Joined: Wed Feb 21, 2007 2:28 am
Location: Philippines

Re: BRSIX - 20% distribution

Post by kramer » Wed Nov 12, 2014 8:08 am

EmergDoc wrote:I hold mine in a Roth. If I could get a higher pre-tax total return by using a non-tax managed fund, I would do so. How much return do you suppose the tax management is costing me? I can't imagine it's much if the distributions are this large.

Since the gains always seem to be long and not short term cap gains, my best guess is that the tax management consists mostly of avoiding short term cap gains. If that is the case, the main issue is probably tracking error and not performance (??). These distributions are pretty bad for a long term taxable investor.

User avatar
White Coat Investor
Posts: 12854
Joined: Fri Mar 02, 2007 9:11 pm
Location: Greatest Snow On Earth

Re: BRSIX - 20% distribution

Post by White Coat Investor » Wed Nov 12, 2014 1:46 pm

If the tracking error evens out over time (sometimes positive and sometimes negative), no big deal to me as a long term buy and holder. However, if it's mostly negative....that's lost performance.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

User avatar
kramer
Posts: 1556
Joined: Wed Feb 21, 2007 2:28 am
Location: Philippines

Re: BRSIX - 20% distribution

Post by kramer » Thu Nov 12, 2015 9:07 am

I hate to keep resurrecting this thread but BRSIX has another big capital gains distribution in 2015 coming, all long term capital gains. From: http://bridgeway_web.s3.amazonaws.com/c ... ebsite.pdf

They are predicting a $1.54655 long term cap gains distribution where the current fund value is $14.95, so that is about 10.3%. Here have been the approximate cap gains distributions over the last four years, just looking over this thread:

2012: 20%
2013: 10%
2014: 11%
2015: 10%

BRSIX is down about 6% YTD in 2015.

bradshaw1965
Posts: 635
Joined: Tue Jul 31, 2007 9:36 pm

Re: BRSIX - 20% distribution

Post by bradshaw1965 » Mon Dec 19, 2016 11:22 am

2016 update:

1.04446 on $14.40 7.25% long term capital gain distribution

User avatar
kramer
Posts: 1556
Joined: Wed Feb 21, 2007 2:28 am
Location: Philippines

Re: BRSIX - 20% distribution

Post by kramer » Tue Nov 14, 2017 7:45 am

2017 BRSIX update:

$2.02 estimated LTCG distribution, current price is $15.53

13% distribution (estimated)

Post Reply