In response to incurring mounting capital gains taxes, investors have moved assets into tax-managed funds, fund analysts say. As a result, a number of companies have introduced new tax-managed funds. Prior to this year, many funds performed well as stock prices soared. However, as those prices begin to fall, as they did this year, especially in the tech stock area, capital gains have been realized from sales of stock to meet redemptions and investors have been hit with increased taxes.
The Fidelity Tax Managed Stock Fund has seen assets rise from $68.8 million at the end of November, 1999 to $99 million at the end of November, 2000, a growth of nearly 50 percent, according to MAXfunds, a fund tracking firm in Ann Arbor, Mich. In the same period, the assets of the J.P. Morgan Tax-Aware U.S. Equity Fund grew more than 37 percent, and the assets of the T. Rowe Price Tax-Efficient Growth Fund have grown over 28 percent, according to MAXfunds.