Managers realize gains all the time, of course, in managing portfolios. But selling has intensified this year, especially amid volatility like last week's. Some managers rushed to lock in gains before they evaporated in the summer downturn. Some may have sold stocks to meet real or anticipated redemptions. Other fund managers have cashed in holdings this year to shop for newly created bargains.
Timing is all.
So while it's easy to understand why even struggling funds might have hefty gains distributions this year, it's not easy for new shareholders, who have not shared in the gains, to stomach the payouts. Timing their purchases or sales of fund shares has been the only way investors have been able to exert even modest control over this aspect of fund investing. Distributions typically have been toward year-end but can happen anytime, at the fund's discretion. But in a new twist, some funds have distributed gains well before year-end, sometimes surprising investors. Other funds have taken steps to make sure their investors aren't taken by surprise.