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Strategies & Market Trends : Angels of Alchemy
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To: KevinMark who wrote (21844)11/28/2000 11:05:19 PM
From: Nick Morvay   of 24256
 
Mutual funds are not traders, they are long term holders of investments. Buying cheap shares and selling them into the market early next year, as you suggest, would not meet that mandate. It would create tax problems to investors by reducing tax efficiency, which mutual funds work very hard at maintaining. Otherwise, investors would move elsewhere to reduce their tax burden. Investor redemptions are normally offset by the influx of new money and cash on hand, which is maintained for such occasions. Funds very rarely have to sell into the market for that purpose. This would also reduce their tax efficiency. Selling is more likely done for sector rotation and here selling is offset by buying.

Funds do their tax loss selling in the Sep - Oct time frame, not Dec. It is individual investors that wait for the end of the year before deciding on cleaning house.

Regards,
Nick
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