Vanguard Short Term Inflation Protected Securities Index Fund tax distributions
|Vanguard Fund Info|
|Inflation Protected Securities|
The Vanguard Short-Term Inflation Protected Securities Index Fund is usually recommended for placement in a tax-deferred account, although for some low tax bracket taxpayers living in states with a high tax rate, the fund may be suitable for taxable accounts. The fund is suggested for investor that employ a liability driven investment (LDI) strategy that duration matches real assets to targeted real retirement income, using in a balanced portfolios that include treasury inflation protected bonds. The table below summarizes the fund's relation to a number of tax factors.
The following tables provide long term data on the fund's history of both dividend and capital gains distributions.
Additional tables provide a database of the fund's accounting figures: the annual level of realized and distributed gains; its level of unrealized gains and loss carryforwards; as well as the annual in-kind redemption gains the fund has realized. These figures highlight the level of a fund's tax liabilities.
Because both manager turnover of securities inside the portfolio and investor turnover of fund shares can affect the level of gains realization, an additional table provides historical turnover ratios.
|Vanguard funds: distributions|
The first table provides the fund's historical dividend and capital gains distributions (expressed as yields) along with a breakdown of the component parts of the distribution (treasury interest, short-term gains, long-term gains, and return of capital), which are subject to differing tax rates.
|Year||Dividend Investor shares
|Dividend Admiral shares
|Dividend ETF shares
|Short-term Capital Gains
|Long-term Capital Gains
|Return of Capital distribution
The accounting figures and associated ratios (tables below) can help one visualize some of the major determinants of a fund’s tendency to distribute taxable gains. These determining features include:
Turnover: The rate at which a fund manager sells securities within the fund has a major effect on potential gains realization. Bond funds have higher turnover ratios than stock funds, since the bond manager must buy and sell bonds as they mature, and as the manager maintains the maturity and duration structure of the portfolio. The gains or losses on a bond are primarily determined by changes in interest rates, and in some instances, credit quality.
Similarly, fund shareholders' sales flows have major effects on a fund’s distribution tendencies. Net flows into the fund have the following effects:
- Constant inflows allow a fund manager to purchase a wide range of bonds at different prices. The manager can select high basis securities when forced to sell a bond (this may realize a loss). The manager can also select low basis securities when redeeming a bond in-kind (a non-taxable transaction that can remove an unrealized gain out of the portfolio.)[note 1]
- A large and growing net asset base serves to diffuse any realized capital gains across a large base of shareholders and reduces the per share gain distribution. Large outflows have the opposite effect; any gains realized are spread across a smaller asset base and result in higher per share distributed gains. 
The level of unrealized gains and carryover realized losses in a fund: A fund which defers gains realization accumulates unrealized appreciation, which when distributed, will be taxed; thus the unrealized gain/loss figure shows the potential gain (or loss) that would be realized if the portfolio was to be entirely liquidated. Any loss carryovers a fund possesses can be used to offset future realized gains. The third tab on the Table 3. spreadsheet shows the data in percentage of total assets form. Tab four provides treasury interest percentage. The fifth tab provides annual per share distribution data.
- In-kind redemption is a defining feature of exchange-traded funds. The fund, over its history, has seen a gradual increase in ETF share clsss weighting in the fund asset base.
Chart: ETF ratio to total fund assets
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- A Three Fund Portfolio tailored for stable retirement spending Bobcat, Financial Page, Dec. 4, 2016.
- Dividend data is derived from the N-CSR filings
- Vanguard Tax Preparation Archive
- Capital Gains are derived from annual reports, and are calculated by dividing the dollar amount capital gain distribution by the average net assets of the fund, derived from N-CEN and NSAR reports.
- Return of Capital dividends are derived from annual reports, and are calculated by dividing the dollar amount return of capital distribution by the average net assets of the fund, derived from N-CEN and NSAR reports.
- Larry E. Swedroe, What Wall Street Doesn’t Want You To Know, 2001, pp.227-28. ISBN 0312335725
- Current tax attributes and distributions:Vanguard
- State Individual Income Tax Rates, 2019, The Tax Foundation
- US treasury interest:
- Recent data: Tax information funds, and Prior year tax data archive