Why did the price of my mutual fund drop in December?

For 2019: The Azzad Ethical Fund (ADJEX) will distribute capital gains to its shareholders on December 18, 2019. Shareholders may see the fund’s share price drop for a couple of days while the capital gains are processed and distributed. The post below should help explain this standard procedure of capital gains distributions for mutual funds in the U.S. What are mutual fund capital gains distributions? When a mutual fund realizes capital gains, such as from stock dividends or from selling holdings that had increased in value, the fund must distribute those gains periodically among all fund shareholders. If you own shares in a mutual fund, you will receive a portion of those gains for each share of the fund you own. While the capital gains are being distributed to the fund shareholders, the fund’s net asset value (NAV) — sometimes called the share price — will be lower. But this NAV drop doesn’t mean that the funds lost money because of this event, so there’s no need to worry. Pooled investments like mutual funds are supposed to work this way. When a distribution occurs, a fund’s share price drops by the per-share amount of the distribution. If you’re like most

November 19, 2019 No Comments

Heads up: Azzad Funds distribution will occur next week

On Wednesday, December 19, the Azzad Funds will make a capital gains distribution to all fund shareholders. This will mean the net asset value (NAV) — sometimes called the share price — will be lower on Wednesday than it will have been when the market closed on Tuesday, December 18. But this NAV drop doesn’t mean that the funds lost money because of this event, so there’s no need to worry. Pooled investments like mutual funds are supposed to work this way. When a mutual fund realizes capital gains, such as from stock dividends or from selling holdings that had increased in value, the fund must distribute those gains periodically among all fund shareholders. If you own shares in a mutual fund, you will receive a portion of those gains for each share of the fund you own. When a distribution occurs, a fund’s share price drops by the per-share amount of the distribution. If you’re like most Azzad Funds shareholders and you have elected to reinvest your investment gains in additional shares, you just got more shares of the fund. Why does this happen? Mutual funds are required to work this way to qualify for special tax rules available for

December 7, 2018 No Comments

Understanding capital gains in light of new tax laws

The U.S. stock market this year has given total returns so far of close to 10 percent, which is a good thing for investors. But with the exception of savings in retirement accounts such as 401(k)s and individual retirement accounts (IRAs), Uncle Sam will probably take a cut of your newfound wealth in capital gains tax. An increase in the value of your assets is called capital gains, and how much tax you pay depends on how long you held the investments and how much other income you make. Long-term vs. short-term capital gains taxes Long-term capital gains applies to gains (increased value) on investments or other assets you’ve owned for more than a year. The current capital gains tax rates under the new 2018 tax law are zero, 15 percent, and 20 percent, depending on your income. This chart shows the brackets. 2018 long-term capital gains tax brackets For example, a married couple filing jointly pays no capital gains tax if their total taxable income is less than $77,200. They’ll pay 15 percent on capital gains if their income is between $77,201 and $479,000. For couples above that income level, the rate is 20 percent. In addition, capital gains may

October 5, 2018 No Comments

How to take advantage of long-term capital gains rates

Did you know that you or your heirs might be eligible for a 0% rate on long-term capital gains and dividends? The Tax Cuts and Jobs Act (TCJA) signed into law late last year kept the three federal income tax rates on long-term gains (0%, 15%, and 20%). But unlike the old rules, these rates are no longer tied to the ordinary income rate brackets. What’s more, many individual taxpayers may still qualify for the 0% federal income tax rate on long-term capital gains and dividends. Before you object that your income is too high to benefit, remember that you may have children, grandchildren, or other loved ones who may still be able to take advantage. Here’s what you need to know. Help loved ones to cash in on the 0% rate While your income may be too high to benefit from the 0% rate, you may have relatives who qualify. If so, consider giving them some appreciated stock or mutual fund shares that they can then sell and then pay 0% federal income tax on the resulting long-term capital gains. Gains will be long-term as long as your ownership period plus your gift recipient’s ownership period (before the recipient

August 3, 2018 No Comments

Why your mutual fund dropped on a day the market was up

On Monday, December 18, the Azzad Ethical Fund (ADJEX) made a capital gains distribution to all shareholders, which resulted in an adjusted net asset value (share price) that is lower than it was as of market close on Friday. This is something that all mutual funds do. ADJEX didn’t “tank,” so there’s no need to worry; pooled investments are supposed to work this way. When a fund distributes gains, its share price drops by the per share amount of the distribution–but it’s to your benefit. If you’re like most ADJEX shareholders who have their accounts set to reinvest gains and dividends, you just got more shares of the fund, but your account value remains steady. Why did this happen? Mutual funds are required to work this way to qualify for special tax rules available for registered investment companies. They must pay net income and realized capital gains to their shareholders at least annually. Sometimes this happens monthly or quarterly, but it’s often once a year during December. The reason that distributions occur is because the fund has made money for investors, which is a good thing. Do I have to pay taxes on this? A mutual fund’s distribution of capital

December 19, 2017 No Comments

Understanding taxes on your investment accounts

At this time of year many Americans are thinking about taxes. Even if you’ve already filed your 2016 returns, it’s a good idea to start thinking about next year. We know that figuring out taxes on your investments can be confusing, so here are some things you should know. Understand the taxes you pay on investment income When you sell a stock or mutual fund at a profit, you will usually get taxed. If you sell within the first year you own that security you’ll pay tax at ordinary rates, which could be as high as 39.6% depending on your income level. But the tax code is designed to encourage long-term investing, so if you hold that same security for longer than a year, you’ll pay a lower rate — a maximum of 20% for most stocks and funds. Strive for long-term investing in taxable accounts and minimize frequent trading whenever possible. Keep in mind that you’ll also pay tax on mutual fund distributions even if you don’t sell any shares of the fund yourself. When the portfolio manager sells some of the fund’s holdings, as happens in the normal course of managing the fund, the taxable gains are

April 4, 2017 No Comments