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Anybody have a website that displays “tax efficiency” of a fund?

hank
edited October 2020 in Fund Discussions
I’m using Lipper. For some strange reason, PRIHX, which Price calls “Tax Free”, receives the lowest possible score for “tax efficiency.” (1/5).

Might be that within its (tax-free) category, that’s true. So, what I’d like to do is compare it to similar funds that don’t limit their investments to just tax-free bonds.

Inputting various TRP “tax free” funds generates a wide variety of results. Their longer term (more generic) fund, PRTAX, scores highest (5/5) for tax efficiency at Lipper.

Comments

  • msf
    Morningstar shows tax cost ratio for funds on their "Price" tab (pun not intended). It's on the right hand side in the lower block of data.

    See here.

    The tax cost ratio is 0.03%, meaning that on average, over the past three years, you lost 0.03% of your assets to taxes each year. The category average is 0.02%. So I suppose that means the fund is "horrid", giving up an extra 1 basis point on average each year. Especially with so many HY muni funds giving up nothing to taxes.

    FWIW, over five years, the average tax cost ratio is 0.03%, and PRIHX's 5 year tax cost ratio is also 0.03%.

    If you have access to the M* premium screener, you can screen on HY muni funds. On the "Risk and Tax Cost" data display, you can see all the peers' 3-, 5-, and 10-year tax cost ratios.

    0.03% is nothing. If you really insist on a TRP HY muni fund with a lower tax cost ratio, the screener shows that PRFHX's tax cost ratio is just 1/3 as much: 0.01% across all timeframes.

    FWIW, PRTAX gives up nothing to taxes (tax cost ratio of 0.00%) vs. a category average of 0.04% over three years.
  • hank
    edited October 2020
    @msf - no pun taken:)

    Thanks so much. Honestly, I’m a sloppy self-preparer (of taxes) and just trying to reduce chances of running amuck the IRS. IRAs are easy. Just report distributions. But as my non-deferred holdings grow, taxes seem more complex - easier to screw up.

    I’m guessing high yield munis will over time produce returns similar to investment grade taxable bonds.

    Thanks for doing the math msf. Pretty impressive numbers.
  • Derf
    Schwab gives this info also.
    stay safe, Derf
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