Just interested why you lose tax control with managed funds. My understanding is that with managed funds it becomes a bit more difficult to manage the tax side of the equation, but a degree of tax control can be retained as discussed below.
The managed funds that I am with are essentially 100% distribution. That is, income rather than a capital gain if you stay in the fund on their annual or biannual distribution date, depending on the fund. However, if for example you buy units at a unit price of 1.00 in a fund that only distributes annually, then if shortly before the annual distribution date the unit price is 1.20, I could retain the units, receive the distribution and the distribution would be reflected as income in my tax return. However, if I decide to redeem the units shortly before the distribution date, then the gain from a unit price of 1.00 to 1.20 is reflected as a capital gain in my tax return. The amount of tax that you pay will be the same in either case, but if you are carrying forward a capital loss from an earlier failed real estate venture, for example, then it is best to redeem units and wipe out part of the capital loss that you have been carrying.
The above example is similar to buying BHP post dividend, holding it until just before the next ex-div date and selling BHP to lock in a capital gain (assuming the BHP share price rose significantly during this period). Alternatively, you could sell BHP shortly after the 2nd dividend, in which case part of your gain will be counted as income, and part will be counted as a capital gain in your tax return (assuming that the capital growth was more than the dividend paid).
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