Most U.S. mutual fund shareholders are sticking with their equity fund investments amid increasing volatility in the domestic market.
Mutual fund companies said few investors shifted assets out of stock funds this week after watching the markets swing wildly.
The research group Trim Tabs Financial Services Inc. estimated that a net $6.24 billion was invested in U.S. stock funds in the week ended Thursday. That compares with net outflows of about $3.8 billion in the prior week, according to Trim Tabs.
“It’s another sign that when the market’s up, we have inflows and when it’s down, we have outflows,” said Charles Biderman, Trim Tabs’ president.
The Trim Tabs estimate excludes Friday’s trading activity, which closed out a week in which the Dow Jones Industrial Average climbed 2.5 percent after falling 4.2 percent last week.
The reports from fund companies are consistent with conventional wisdom in the $4 trillion fund industry: that fund investors ignore short-term fluctuations in the markets.
‘Wealth Care Kit’ offered
A new “Wealth Care Kit” offered by the National Endowment for Financial Education includes an assessment guide that can help you determine your current assets and liabilities. It also covers five topics: insurance, retirement planning, income tax planning, investment planning and estate planning. Each section includes either a checklist or worksheet. For a free copy write to the NEFE’s Public Education Center, Department Box 016, 4695 South Monaco Street, Denver, Colo. 80237-3403.
Gift tax rules changing
Recently approved cuts in the capital-gains tax rate have many people considering the sale of long-held securities and other assets.
The cost basis in a stock is the price against which the capital gain or loss is computed. Generally speaking, when stock is transferred as a gift, the price paid by the donor becomes the cost basis of the recipient.
Tom Hines, senior manager in the personalfinancial counseling group of Ernst & Young in Chicago, says the burden of proof in establishing the basis is on the taxpayer.
“If you can’t document the basis, it’s assumed to be zero,” he said.
But you need to determine the date of the gift. Gift tax rules have changed through the years, and it’s possible that under previously applicable law you might be able to use the fair market value at the date of the gift as your basis.
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