For IRAs, there won’t be any tax impact. If you have a taxable account, we’re selling about one-third of your current investments to reinvest in funds aimed at improving long-term returns.
This might result in taxable gains, typically less than 0.70% of your account’s value. The exact impact depends on factors like your tax bracket, when you funded your account, and your investment strategy.
In our analysis, over 90% of accounts will see a very minor tax impact, with an average expected cost of less than $5. To help reduce any tax impact, we use a tax-minimization strategy that carefully selects which investments to sell first.
After evaluating the benefits of this portfolio update, our Investment Committee determined that the long-term improvements in performance and tax efficiency outweighed any short-term tax costs.