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Rating:Tax Reform Ended Up Pretty Good For Fundsters Not Rated 0.0 Email Routing List Email & Route  Print Print
Wednesday, December 20, 2017

Tax Reform Ended Up Pretty Good For Fundsters

Reported by Neil Anderson, Managing Editor

Tax reform is nearing the finish line, and fundsters may be able to breathe a sigh of relief about the whole thing.

"For the most part, for our industry the bill is pretty good," one Washington-watching fundster tells MFWire. "There's nothing really problematic for mutual fund shareholders or for mutual funds."

Paul Schott Stevens, president and CEO of the Investment Company Institute (ICI), calls the bill "historic tax legislation" and praises it for bringing "long over-due changes to the tax code to encourage capital formation, enhance the competitiveness of US companies in international markets, and trigger faster economic growth."

Stevens also praises the bill for — as detailed by our sister publication, 401kWire — leaving the 401(k) system largely unchanged. About half of 401(k) assets are in mutual funds.

Another provision that worried fundsters, the so-called FIFO ("first in, first out") proposal, also was left out of the final bill. The proposal would've forced investors to sell their oldest shares of an investment first, rather than choosing which age shares to sell (often for tax purposes). Mutual funds themselves would've been exempt, but mutual fund investors and investors in individual securities could've been seen rebalancing become much more painful. Earlier this month Stevens laid out potential unintended consequences of the FIFO idea.

Beyond investment and retirement provisions, fundsters may find themselves smiling about the bill's broader effects, too, if it boosts stock prices and therefore AUM levels. 

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