Talk:Index fund

message: I think it would be good to clarify what is meant by "tracking" or "index tracking", since this term is probably jargon to a layperson. It would be easiest to link-out to another article that provides a definition of this term; though, I could not find one. Does anyone know of an article subsection that defines index tracking? If there's not a good way to clarify what is meant by index tracking, near the beginning of the article (there probably is), I've drafted a footnote that could work.

==Notes==

I haven't seen many 'nota bene' footnotes on wikipedia in recent years, so I'm not sure whether footnote definitions are still au courant according to MoS. 
Thoughts? Niubrad (talk) 08:45, 19 April 2017 (UTC)
thread_title:  Track / Tracking Definition 

message: There should be some valid disadvantages.  Perhaps we can say that an index fund will not outperform the target index.  (while pointing out that it should not under-perform the target
index)
Controversial disadvantages:
* capital gains distribution - yes, but only individual stocks avoid this, and individual stocks are hard to diversify.
* intra-day pricing - current index fund definitions include ETF, and ETFs do have intra-day pricing.  Beside, intra-day pricing does not matter for long term investors. --MegaHasher 03:26, 4 January 2006 (UTC)
replies: text: Paul: I don't understand your third point as worded.  The index fund trade happens at 4pm daily, but I fail to see how it is related to lack of sector information.  The sector pricing should be available from the sector ETFs should you want them.  The main article should be in encyclopedia style, and it means no user names in main article, and written in clear neutral point of view.  For "controversial" materials, a discussion from both sides should be included. Alternatively, controversial material may become clear with more explaination.  --MegaHasher 01:19, 16 January 2006 (UTC)
thread_title: Disadvantages

message: I will have some new contents that will fix the POV issues, peacock terms, and a more encyclopedia style. --MegaHasher 21:56, 7 January 2006 (UTC)
replies: text: I added Malkiel to the front of the history section.  Bogle wrote about Samuelson, Ellis, and Ehrbar directly.  Bogle certainly knew of Malkiel's work.  I think this arrangement of paragraphs will work. --MegaHasher 03:01, 8 January 2006 (UTC)
thread_title: New contents soon

message: Index funds are not very glamorous, and they lack the excitement and mystery of the active funds.
*Point of view is slightly bias in favor so I throw this out all together. Excitement being Volatility, and Mystery being uncertainty. Is not the kind of advice I would want to give a passive investor.Paul.Paquette
: OK.  There are some grammar issues for later re-work. --MegaHasher 00:43, 28 January 2006 (UTC)
replies: text: Funds hold cash to meet redemptions, and this is a drag on performance.  Recently some funds hold index ETFs or Vipers to sell intra-day to meet redemptions.  Just look at some of Vanguard mutual funds' holdings; they are Vipers.  --MegaHasher 23:27, 27 January 2006 (UTC)
replies: text: That is ingenious, why hold cash, let me just liquidate this ETF without making capital gains distribution and sell back the shares the next day, lol Paul.Paquette
*ETFs can reduce capital gains distribution through "in-kind" creation and redemptions, but a change of index composition may still realize some capital gains (not in-kind).  --MegaHasher 00:43, 28 January 2006 (UTC)
thread_title: Comments between [[User:MegaHasher|MegaHasher]] & [[User:Paul.Paquette|Paul.Paquette]]

message: Rather US-centric. What are the tax implications in other jurisdictions? Leibniz 14:09, 5 February 2006 (UTC)
replies: text: Capital gains taxes are pretty common throughout the world, and it's something most people would have to worry about, even if the percentages vary. MrVoluntarist 17:46, 12 September 2006 (UTC)
replies: text: That's not really true, as a look at the Capital Gains Tax page shows. In New Zealand for example index funds have a tax advantage because they are seen as passive not as active trading.NZ forever 03:11, 2 June 2007 (UTC)
thread_title: Capital gains distribution

message: Diversification has it's own section but should it also be included as an advantage? Pocopocopocopoco (talk) 05:41, 10 December 2007 (UTC)
replies: text: I read the diversification section, and I suspect the reason that whoever added it didn't put it under "Advantages/Disadvantages" is because not all index funds are equally diversified.  The article makes the point that a sector index may be narrowly concentrated (i.e. poorly diversified) while a broad-based market index may be well diversified.  Hence simply stating that a fund is an index fund does not in of itself guarantee good or poor diversification, and by putting "Diversification" in its own section, the current writeup avoids making a blanket statement that all index funds are well diversified.  -- Elch Yenn (talk) 17:50, 10 December 2007 (UTC)
replies: text: Excellent point! Keithbob--Keithbob (talk) 20:32, 10 October 2008 (UTC)
thread_title: Diversification

message: "The examples and perspective in this article may not represent a worldwide view of the subject. Please improve this article and discuss the issue on the talk page. (February 2014)"
Why not? I couldn't find any comments here. Can I delete "Globalize |date=February 2014 |discuss=Talk:Index fund#Globalize"?  — Preceding unsigned comment added by 87.174.223.245 (talk) 17:27, 5 January 2015 (UTC)
replies: text: done Smallbones(smalltalk) 19:24, 2 May 2016 (UTC)
thread_title:  worldwide view  

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thread_title:  External links modified 

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thread_title:  External links modified 

message: The tax section fails to mention the tax headaches that an investor holding mutual funds in a taxable account can face if he ends up in an international situation.  Note that most mutual funds only provide tax documentation for a single country's tax laws, causing a huge nightmare when filing in a different country (or as the case of a US citizen living abroad) filing taxes in more than one country.
If a US citizen holds a foreign mutual fund then he is at peril, although some of this peril can be avoided if the foreign mutual fund provides a PFIC annual information statement, provided the US taxpayer files US tax form 8621 in a timely manner and declares the foreign fund as a qualified electing fund.  The basic principle of international tax is that US law regards anything foreign as a possible suspicious tax dodge, and congressmen feel stupid when a rich guy with fancy lawyers uses international means to avoid US tax.  Because of this, US law tries to close all possible loopholes, and in doing so hurts innocent legitimately international US citizens.   The closed loophole in question here is hiding income-generating assets in overseas shell corporations or mutual funds to avoid receiving a 1099 form each year reporting the taxable income and gains/losses.  The harsh response of US law is in sections 1291-1299 of the US tax code, and you can absolutely get hammered to the point of paying more than 100% tax on capital gains after an extended holding period.  (Ill-gotten capital gains are backdated by the IRS over the entire holding period, taxed at the highest marginal rate for prior years even if they are gains and not income, and then back-interest is applied on taxes on backdated gains.)   This would cause the bizarre situation of wanting to sell an appreciated asset at zero gain for the original purchase price instead of the market price,  which would run afoul of securities law.
British law is also hostile to foreign investments, but I am not familiar with the details because I only had a US-citizen-resident-in-canada siutaiton.  A friend of mine is a US citizen resident in Britain, and he pays an accountant $10K/year to prepare his US taxes, even though after the foreign tax credit his US tax burden is always 0.
OK, I don't have time to write a carefully referenced article for wikipedia about international tax hazards of mutual funds, but the article needs to mention this.  If you are a US citizen and move overseas then you will file taxes in two countries, and take tax credits on both returns for taxes paid in the other country.  The tax treaties are supposed to protect you from double taxation, but there are many devils in the details, and basically you are screwed by very small difference in definitions of things between the domestic and foreign tax codes.  If your mutual fund does not provide the correct tax reporting documents for the foreign country and for the USA then you are screwed.  If your mutual fund does provide the correct documents and you don't file them correctly in a timely manner then you are also screwed.
27.33.172.206 (talk) 06:10, 29 August 2018 (UTC)
thread_title:  Inadequate discussion of tax consequences 

message: "As of 2014, index funds made up 20.2% of equity mutual fund assets in the US". 
Is this the best that we can do, figures from 10 years ago?  
I'm not suggesting a better source as this is not my field, but I suspect this is double that now. 
Is it okay if I update with new figures from same source ? 
https://www.ici.org/fact-book 2024 Thomasthetanker (talk) 16:27, 28 May 2024 (UTC)
thread_title:   Bit out of date