Mutual Fund Liquidation

Although you may have invested in a mutual fund for several years and have made good

profits from this investment, there's the slight chance that the fund will be liquidated (with the proceeds going to you, the investor). It's unusual for these funds to liquidate, although it isn't unheard of.

Companies that provide mutual funds may close the fund, liquidate, and distribute the proceeds to shareholders for many different reasons. One of these reasons include under performance of the fund which can burden the company providing it if the fund isn't closed. Another reason may be the merging of two similar funds, as opposed to the option of liquidation or having two funds in a single category.

In an open-and-shut case of mutual fund liquidation and the distribution of proceeds, you won't get any tax breaks, nor are you likely to have any alternatives to the closing of the mutual fund. A transaction, in this case, occurs much like any other kind of sale - the adjusted basis of the cost is subtracted from the proceeds received. If the amount an investor gets after liquidation is bigger than the cost basis, the investor gains. If the basis is bigger than the proceeds, the investor will have to chalk it up as a loss.

Mutual fund companies can liquidate a fund for whatever reason. When you think about it, these companies aren't that different from other, more traditional businesses. For example, if a clothing line from a certain manufacturer doesn't sell as expected, the company stops production and goes on to other things - this can be true with mutual funds, too.

If you receive notice of mutual fund liquidation, there's not much you can do but wait for the proceeds. Whether you gain or lose from the liquidation, you can get expert advice on what to do next by consulting with an investment planner.

by: Carina Smith

POST COMMENT

Get Rid of Gonorrhea and Be a Better You: Don't Acquire it Why Reading Is The Fundamental Building Block To A Good Brain HANDS AND POOR PEOPLE OF PAKISTAN The Downtown Los Angeles Streetcar Project - Connecting Neighborhoods And Developing Communities A Few Differences between Hot Tubs and Spas Hire Packers and Mover to Get Out Of Relocation Peril Do not make a mistake of ignoring the relevance of right connecting accessories for gadgets Control Stock with Point of Sale Technology Dwellings and Buildings Low-cut Retreat Packages To Exhilirate You: Suites, Air Fare, Chow Area, Shops, Things To Do, And Ka PRACTICAL AND TOOLS What Are Your Rights And Entitlements As A Couple? Eminem And Rihannas Seventh Consecutive