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There was a good discussion of this issue perhaps 2-3 months back. ISTM I initiated the post after getting hit with a 15% “foreign tax” on an annual distribution on an ADR (Swiss based). I’m unable to find that thread. But if anyone can pull it up it might help clarify things. There were some excellent comments by @msf and others.
FWIW - Whatever the bottom line on this issue, it didn’t change my opinion about owning the stock. But I did recently sell it as part of a consolidation / risk reduction move. (And it’s been going up ever since)
I remember that @hank, but I didn't pay much attention because I thought the concern related more to individual foreign stocks in a Roth, not mutual funds. I could be wrong or naïve, but personally I have no concern owning International or global funds in my Roth.
After further research, it seemed likely that they would stick to their style over time. Whether they will always be as successful as they have been . . . Time will tell.
Picked up just several more shares of PSTL. Reducing cost basis. I think the prospect of the ending of interest rate hikes will help the stock. It's a Postal REIT.
It's a little less high at the close of today's market.
PE is at 13.68, book 2.36, price/cash 7.98, price/sales .84. Smids (which is the current weight,, rather than the category) have been out of fashion for a while. I think there's room to run a little bit.
I have a long horizon in the taxable, which is heavily tilted to dividends at the moment. It's a little less flighty than recently added RWJ and SYLD. Sort of a boring match for SPGP, also recently added.
I added FMIMX to the IRA on June 8. I might regret not adding it to the taxable sooner. We'll see how I feel 10 years from now.
BTW, FMIMX has been an MFO Great Owl for at least 25 years, IIRC.
@WABAC : I held this MF for a number of years in 401-K until it was sold due to moving into IRA. 10 year holding & a winner for sure !
Don't have to start taking IRA distributions for 6-7 years. So I'm hoping it can be an equity cornerstone in that part of the market as I condense the holdings.
Sold TAN from the IRA. It was .92%. Hasn't done much in the year I owned it. And I feel the need to start taking the ornaments off the retirement tree.
Added the proceeds to PRWCX since it is NTF at Fidelity, and the position could be bigger.
@WABAC: ISTM that at the time you mentioned buying TAN, you also spoke of GRID. That was a great pick, up some 38% the last year. QCLN and ICLN, also clean energy themed, have both failed to put up exciting numbers.
Added to ATT preferred C shares for l/t qualified income on this week's swoon over the lead cables story. (I trust it more than the common.)
Also srsly considering adding to my moderate sized position in VZ on the recent swoon, too.
I'm seriously underwater with T. At this point, there's an opportunity cost as it flounders and the market charges higher. As I have gains to offset, I'll wait until it grinds a bit higher by year end or the market corrects presenting further opportunity for a tax loss swap.
Sold my last two remaining stocks (both mid-caps). Both great prospects, but time stops for no man. At my age, individual stocks don’t seem like a prudent choice. Remain near fully invested across moderate risk alternative , equity and fixed income products thru several houses. Never one to hold a lot of cash. Don’t like to mention specific funds, but Calimos has some interesting products in the OEF & CEF areas if you’re looking around - albeit higher fees than many.
@WABAC: ISTM that at the time you mentioned buying TAN, you also spoke of GRID. That was a great pick, up some 38% the last year. QCLN and ICLN, also clean energy themed, have both failed to put up exciting numbers.
GRID has been great. FIW hasn't been bad either. Both are small holdings in the IRA, but may get a little love going forward. And I'm also thinking about EVX. But not for the IRA.
I'll will be looking to dump ICLN as soon as possible. It too goes sideways. It's around 45% utilities. It gets little juice from Tesla. Electric cars are great, I suppose. But vehicles are still consumer items. So I take that segment with a grain of salt if hot returns are based on vehicles.
@WABAC: I have hung on to FIW with no regrets. Of the « theme » ETFs I own or have owned, PAVE held up the best during 2022. The ones I sold don’t get mentioned.
@WABAC: I have hung on to FIW with no regrets. Of the « theme » ETFs I own or have owned, PAVE held up the best during 2022. The ones I sold don’t get mentioned.
PAVE looks like a good one. I'm all booked up on infrastructure with GLIFX. I was able to upgrade to the I share for 45 bucks at Fidelity. The expense ratio is .97 vice 1.22. First dividend paid the fee. It doesn't shoot the lights out. And it has been going through a rough patch lately. But it helps me sleep at night.
@Derf "I believe IRA's are not eligible for credit or deductions for foreign taxes paid on Fed taxes. That's why I'm moving to taxable account. Correct me if I'm wrong."
You are correct. Brokerage 1099s usually show foreign taxes paid (there are some peculiar exceptions at Vanguard), so in a taxable account you can claim a credit. Not in IRAs. Hence, I always keep foreign dividend payers in taxable.
Note however that Canada is an exception. There is a US-Canada agreement in place so that Canadian assets held in US IRAs are exempt from tax withholding:
"… the 15% withholding tax that is normally imposed by the Canada Revenue Agency is waived when Canadian securities are held within U.S. retirement accounts. This is an important component of the U.S.-Canada tax treaty ..."
Excerpt: Vanguard's 1099s do not include foreign taxes paid for many funds, such as VT (Vanguard Total World Stock ETF), VGWAX (Global Wellington), or VGYAX (Global Wellesley Income), which have significant foreign stock exposure (including foreign dividend-paying stock exposure). This is nuts -- these funds are 40-50% foreign.
And yet, VG does provide foreign tax information on funds like STAR and the Life Strategy and Target Retirement funds, which have a minimal amount of foreign exposure.
I hold SCHY in my Roth IRA's and was told by Fidelity that it doesn't withhold taxes on Foreign Dividends. I had posed the question to 2 reps from Schwab and never got an answer. I hope Fidelity is correct.
My 2022 Form 1099 shows Foreign taxes flowed through from SCHY. It was ~ (<)10% of the dividends. I shall let others delve into IRAs and foreign taxes pass through from ETFs.
MRFOX, which I profiled in Feb. 2019 I believe. +3% LT vs. SP500, 3.3% 5yr; .9% 3yr; 4.0% 1yr. No down years in its 7.5 year history. YTD +9.20%. Mid-cap growth.
Just rotated funds from VBIRX to VMSIX (new fund for me) PIMIX (added to existing), and VWIAX (existing fund). Already in VG Ultra short fund and VG settlement cash. Decided to piggyback on the rising Multi sector bond funds, and continue adding to our conservative allocation fund.
Prior to retiring I would hold funds through thick n’ thin. But find that having limited new money, requires rethinking many former beliefs.
Comments
FWIW - Whatever the bottom line on this issue, it didn’t change my opinion about owning the stock. But I did recently sell it as part of a consolidation / risk reduction move. (And it’s been going up ever since)
BTW, this is the article that first got me interested: https://www.morningstar.com/funds/all-weather-stock-funds-do-exist
After further research, it seemed likely that they would stick to their style over time. Whether they will always be as successful as they have been . . . Time will tell.
For periods ending 06/30/2023:
YTD: 13.6% (top 10%)
1 Yr: 26.0% (top 3%)
3 Yr: 21.0% (top 1%)
PE is at 13.68, book 2.36, price/cash 7.98, price/sales .84. Smids (which is the current weight,, rather than the category) have been out of fashion for a while. I think there's room to run a little bit.
I have a long horizon in the taxable, which is heavily tilted to dividends at the moment. It's a little less flighty than recently added RWJ and SYLD. Sort of a boring match for SPGP, also recently added.
I added FMIMX to the IRA on June 8. I might regret not adding it to the taxable sooner. We'll see how I feel 10 years from now.
BTW, FMIMX has been an MFO Great Owl for at least 25 years, IIRC.
But I can still go crazy with the taxable.
Added the proceeds to PRWCX since it is NTF at Fidelity, and the position could be bigger.
I can still play with the taxable.
Also srsly considering adding to my moderate sized position in VZ on the recent swoon, too.
I'll will be looking to dump ICLN as soon as possible. It too goes sideways. It's around 45% utilities. It gets little juice from Tesla. Electric cars are great, I suppose. But vehicles are still consumer items. So I take that segment with a grain of salt if hot returns are based on vehicles.
You are correct. Brokerage 1099s usually show foreign taxes paid (there are some peculiar exceptions at Vanguard), so in a taxable account you can claim a credit. Not in IRAs. Hence, I always keep foreign dividend payers in taxable.
Note however that Canada is an exception. There is a US-Canada agreement in place so that Canadian assets held in US IRAs are exempt from tax withholding:
https://www.suredividend.com/canadian-taxes-us-investors/#retirementaccounts
"… the 15% withholding tax that is normally imposed by the Canada Revenue Agency is waived when Canadian securities are held within U.S. retirement accounts. This is an important component of the U.S.-Canada tax treaty ..."
See discussion here:
https://big-bang-investors.proboards.com/post/39582/thread
https://big-bang-investors.proboards.com/post/38655/thread
Excerpt:
Vanguard's 1099s do not include foreign taxes paid for many funds, such as VT (Vanguard Total World Stock ETF), VGWAX (Global Wellington), or VGYAX (Global Wellesley Income), which have significant foreign stock exposure (including foreign dividend-paying stock exposure). This is nuts -- these funds are 40-50% foreign.
And yet, VG does provide foreign tax information on funds like STAR and the Life Strategy and Target Retirement funds, which have a minimal amount of foreign exposure.
See here which funds VG does provide foreign tax information for:
https://www.vanguard.com/pdf/FTC_2023.pdf
Prior to retiring I would hold funds through thick n’ thin. But find that having limited new money, requires rethinking many former beliefs.