Skip to main content

The Globe and Mail

Why am I paying capital gains if my mutual fund lost money?

Hi Nancy,

I've just received a tax document from the bank showing over $8,000 in capital gains this year on a mutual fund I own. How can this be when the fund is worth less now than it was a year ago? I haven't bought or sold any units during the year.

Terry

Story continues below advertisement

Dear Terry,

The capital gains can happen to any mutual fund because the fund manager sells holdings within the fund during the year to realize gains. It is at their full discretion to do so. These capital gains are different than the capital gain/loss that you as a fund owner can realize when you sell your own units.

This is a possibility that unit holders must be aware of, especially when purchasing funds in the latter part of the year. They can be taxed capital gains that were realized even prior to them being a unit holder.

Nancy



Nancy Woods, CIM, FCSI, is an associate portfolio manager and investment adviser with RBC Dominion Securities Inc. To ask her a question, send an e-mail to asknancy@rbc.com or visit her web site at nancywoods.com

READ MORE FROM OUR ASK AN ADVISER SERIES HERE

For tips, stories, videos and live chats ahead of this year's RRSP contribution deadline, check the Globe Investor 2012 RRSP season website for daily updates.

Story continues below advertisement

Report an error Licensing Options
About the Author

Nancy Woods, CIM, FCSI, is an associate portfolio manager and investment adviser with RBC Dominion Securities Inc. More

Comments are closed

We have closed comments on this story for legal reasons. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

Combined Shape Created with Sketch.

Globe Newsletters

Get a summary of news of the day

Combined Shape Created with Sketch.

Thank you!

You are now subscribed to the newsletter at

You can unsubscribe from this newsletter or Globe promotions at any time by clicking the link at the bottom of the newsletter, or by emailing us at privacy@globeandmail.com.