Is there a broad index fund with no dividends?

[jaw8472]

Looking for a broad index fund that throws out zero interest, dividends
and capital gains. Zero until it is sold.

DW inherited a mid 6 figure IRA from MIL.
As we do not need this DW wants to put RMDs on this in an aftertax
account that would be inheritable tax free in 30-40 years to children.

Self 63 DW 57 MFJ
Fired at age 60 and realized we had won the game.
For the next 7 years trying to convert/spend down a very large IRA/401K.
Keeping withdrawals under IRRMA $170,000. Do not want any more income.

Plan:
Stay unemployed until age 70 and then take social security and start
RMDs and hopefully stay below IRRMA.
Go on medicare at 65.

Thinking about Berkshire Hathaway B as a stock although the indexer in me does not own any individual stocks..

[arcticpineapplecorp.]

have you read about tax managed funds:

https://www.bogleheads.org/wiki/Tax-man ... comparison

takeaway:

Total Stock Market is still better than a combination of tax-managed funds, except in the top tax bracket, and even then it is just as good.

your question has been asked before:
https://www.google.com/search?sitesearc ... +dividends

let the google be your friend

[jaw8472]

Way to high dividends.
A couple percent on $500,000 is $10000.
We are PAWs (prodigious accumulators of wealth) I read both millionaire next door books and saw ourselves in them.

[aristotelian]

I am not aware of any zero-dividend ETFs. The thinking is probably that the lack of diversification would not be acceptable to most investors.

The best bet is probably to do something like holding VUG or SCHG in taxable, and then hold a dividend or value ETF in your retirement accounts. Overall you would be well diversified but significantly more tax efficient than holding the total index in taxable.

[Nate79]

The only way is if the fund holds only stocks of companies with no dividends.

[vineviz]

Looking for a broad index fund that throws out zero interest, dividends
and capital gains. Zero until it is sold.

You won't find such a fund.

I've written about this before (viewtopic.php?f=10&t=266110) but the best solution is to choose a small cap growth fund in the taxable account and "complete the index" so-to-speak with a high dividend fund like iShares Select Dividend ETF (DVY) in the tax-advantaged account.

[arcticpineapplecorp.]

there are no interest savings accounts, but something tells me that's not what you're looking for.

[TomatoTomahto]

Buy 2 shares of BRK.A.

[Vegomatic]

Re: Using Berkshire (Either A or B Class)

A 'similar' situation came up with a friend of mine, about 15 years ago. I recommended ownership of Berkshire, along with VG's muni funds, as needed, to "balance" out asset allocation.

Another possibility that get's 'close' is Vanguard Tax Managed Balanced Fund [VTMFX], which is 51% Muni and 49% stocks. Can do similar things with ETFs for muni's and (growth) stocks.

Here is factsheet for VTMFX:
https://institutional.vanguard.com/iipp ... /FS103.pdf

Here are distributions for VTMFX:
http://etfs.morningstar.com/distributio ... ture=en-US
(Need to talk with VG to get tax-exempt/taxable split)

Portfolio Visualizer Link for a couple of alternatives:
https://www.portfoliovisualizer.com/bac ... ion3_3=100

[AlphaLess]

1. It is hard to construct a broad index fund with no dividends because: (a) most of the weight in broad index fund comes from more safe, large-cap stocks, (2) most of those types of stocks pay dividends, and (3) even stocks outside of that group pay dividends.

2. There are some tax-managed funds (like VTCLX vs VTSAX), but you will notice that even VTCLX pays a lot of dividends (simply because it owns most of the same stocks), *AND* I would venture to say that VTCLX is not much more tax efficient than VTSAX. In fact, whole-market index funds like VTSAX are pretty darn tax efficient,

3. Suppose someone could construct a no-dividend index fund for you: i.e., EXCLUDE every stock paying dividends, and include every stock paying dividends. Firstly, this will be a poor index, because you will have to constantly rebalance to include / exclude stocks, and second, you will have an exposure to a fundamental factor called 'dividend' (namely, a negative exposure), and it is not clear whether such an exposure is justified.

[Theseus]

OP,

In your case I would recommend looking at https://www.fidelity.com/managed-accoun ... y/overview

I invested over a year ago. It is supposed to track S&P 500 type performance but it generated capital loss. For me it generated 10% of total invested funds as a capital loss. It is helping me significantly reduce my capital gains from regular S&P investment. I couldn't be happier. It is actively managed, but the objective is to generate capital loss while tracking S&P 500. I closely monitored almost on a weekly basis for a year and its pre-tax tracking is almost identical. Post-tax is obviously significantly better.

[Epsilon Delta]

Another issue.

I remember when Microsoft was a non-dividend paying stock. A pure non-dividend index fund would have been hit with huge realized capital gains when MS declared their first dividend and was dropped from the index. As I understand it the tax managed funds try to make reasonable trade offs when these things happen.

[grabiner]

You can't avoid dividends completely, but you can minimize them, with something like Vanguard Tax-Managed Capital Appreciation. This fund tracks the Russell 1000 (a large-and-mid-cap index), but selects stocks with lower dividends while maintaining the sector weights.

However, I don't normally consider this fund worthwhile. The extra tax on Vanguard 500 Index (if you don't need small-caps) or Total Stock Market Index (if you do) will be comparable to the expense difference.

Another way to avoid dividends is clearly undesirable: buy a high-expense fund, which uses most or all of its dividend yield to cover the expenses (so that you lose 100%) rather than paying them to you (so that you lose an amount equal to your tax rate).

[radiowave]

Re: Using Berkshire (Either A or B Class)

A 'similar' situation came up with a friend of mine, about 15 years ago. I recommended ownership of Berkshire, along with VG's muni funds, as needed, to "balance" out asset allocation.

Another possibility that get's 'close' is Vanguard Tax Managed Balanced Fund [VTMFX], which is 51% Muni and 49% stocks. Can do similar things with ETFs for muni's and (growth) stocks.

Here is factsheet for VTMFX:
https://institutional.vanguard.com/iipp ... /FS103.pdf

Here are distributions for VTMFX:
http://etfs.morningstar.com/distributio ... ture=en-US
(Need to talk with VG to get tax-exempt/taxable split)

Portfolio Visualizer Link for a couple of alternatives:
https://www.portfoliovisualizer.com/bac ... ion3_3=100

Be careful with VTMFX as half of the portfolio is tax-exempt municipal bonds . . .

Self 63 DW 57 MFJ
Fired at age 60 and realized we had won the game.
For the next 7 years trying to convert/spend down a very large IRA/401K.
Keeping withdrawals under IRRMA $170,000. Do not want any more income.

The OP is concerned about IRMMA. The income ceiling is based on MAGI and any tax-exempt dividends counts toward MAGI which could push him above the 170k threshold.