Start Liquidating a mutual fund

Liquidating a mutual fund

Full closure of a mutual fund means liquidation of the fund.

The rate of return of other funds may look enticing, but be careful: there are both pros and cons to the redemption of your mutual fund shares.

Let's examine the circumstances in which liquidation of your fund units would be most optimal and when it may have negative consequences.

Losses Due to Capital Gains Tax You may have to sell for a net profit, despite losing quite a bit of potential profit due to selling at an inopportune time.

Any time you net a profit on the sale of an investment, you are subject to capital gains tax.

Do so if you believe the fund is heading for liquidation.

In a closed-end fund, consider whether the assets are currently selling at a premium or a discount. If they are selling at a discount, ride out the losses.

In this case, you would be selling for a net loss instead of a net profit.

This is more of a likelihood with a new mutual fund that failed to pick up investors than with an established fund that simply cannot sustain growth.

The funds’ assets peaked at $150 million at the height of the Internet bubble, Mr.

Lawrence said, and have since been shrinking because of disastrous performance.

The announcement came nearly two weeks after managers of the Oakmark Small Cap Fund announced that it would be closing.