Mutual fund investors will get more information about the tax bite on their portfolios and their after-tax returns under rules adopted Friday by the Securities and Exchange Commission.
Taxes are one of the most significant costs of investing in mutual funds.
The rules, proposed by the SEC in March, are designed to help investors understand the magnitude of tax costs and compare the impact of taxes on the performance of different mutual funds. The tax impact on investors varies widely among the 7,000 or so mutual funds in this country, because differences in fund investment strategies can produce markedly different tax consequences. Last April, the House of Representatives passed legislation directing the SEC to develop final rules on mutual fund tax disclosure within 18 months. Mutual fund companies currently are required to disclose only returns before taxes. The mutual fund industry has said it supported, in principle, the SEC rules.