The six-year-old bull market is taking a big tax bite out of mutual fund investors. As fund managers sell off shares in many of their big winners, they distribute large capital gains to shareholders, who then must pay tax on those gains if the fund shares are held in taxable accounts. Early in the bull market, many funds could offset their gains with hefty accumulated losses, reducing net taxable gains to shareholders. But few funds still have such losses to draw upon.

That doesn’t mean you should sell a fund because you face a big potential tax bite. After all, you’d have to pay capital gains tax on your profits anyway if you sold shares. But if you’re considering buying shares in a fund, it’s worth checking in advance how big a tax bite you might face. Also consider whether you can sell any ­investments that are in the red and then use those losses to reduce your net capital gain.

To find a fund’s current capital gains exposure, search for the fund on Morningstar’s website…then click “Tax” near the top of the fund’s main page. Typically, when I see a fund with tax exposure greater than 40%, I figure it may make a big capital gains distribution that year, especially if it has a high turnover rate for its holdings (greater than 50% annually) and/or a high level of redemptions (greater than 20% of its assets annually). Heavy redemptions tend to force managers to sell holdings, which may have big capital gains.

Popular funds with capital gains exposure of 45% or more: Columbia Acorn (ACRNX)…Dreyfus Appreciation (DGAGX)…Fidelity Contrafund (FCNTX)…Fidelity Growth Company (FDGRX)…Fidelity Low-Priced Stock (FLPSX)…Gabelli Asset (GABAX)…Morgan Stanley Institutional Growth (MSEGX)…Selected American Shares (SLADX)…T. Rowe Price Growth Stock (PRGFX)…Vanguard Primecap (VPMCX).

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