why does JAOSX not pay capital gains? Morningstar=5 stars and JAOSX is ranked 1st in returns?

Question

Janus Overseas(JAOSX) has not paid capital gains in several years, but remains one of the hottest mutual funds around. Why is that:? Thanks

Thanks for the replies, but JAOSX has a turnover of >60%, so they are not holding investments. Possibly using CapGains to purchase more equities, but I thought MutFunds were REQUIRED to pay them. My mistake??Thanks

Answer 1

Yes mutual funds are required to pay out capital gains. But funds can counteract their gains by realized capital loss carryovers from years past. And Janus was one of the most aggressive tech heavy fund families during the late 1990's so when the bubble burst in March 2000, they had a LOT of losses to carry forward.

Answer 2

Funds have to pay out Net REALIZED Capital Gains. If the fund doesn't cash out of appreciated holdings, or has enough in realized losses to offset any realized gains then they don't need to pay out a capital gain. However this does mean as a new Investor you are buying all that Unrealized Capital Gain. If you buy the fund and the next day they sell all those appreciated securities you still get to pay tax on it.

Answer 3

could it be a growth fund? this means usually all returns are reinvested-- you usually dont get cap gains on growth stocks because you are paying for the "hottness" of the mutual fund because it is the returns provided by the fund that is fueling its fire.