Mutual Fund Tax; Alpha and beta separation approach

  1. “ETFs are generally more tax efficient than index mutual funds because mutual fund redemption by shareholder might require the sale of securities for cash.”

Does this apply to both Open Ended and Closed Ended mutual fund?

  1. For the Alpha and beta separation approach, the investor could pick by alpha by hiring a manager who specialized in long-short strategies in less efficient small cap market.

Can the investor find someone only specialized in Long-only strategies combined with a beta exposure in SP500 and we can still call is “alpha and beta separation approach”?

Thank you!

>> Can the investor find someone only specialized in Long-only strategies combined with a beta exposure in SP500 and we can still call is “alpha and beta separation approach”?

Correct me if i am wrong. As long as the guy can generate alpha in small cap market, it is "alpha and beta separation approach”.

Closed fund is more similar to ETF or ordinary stock, so I would say that tax issue is related to Open end mutual funds only. Also there is not share redemption at closed mutual funds.

That was what I thought as well. Hope this is the case. Thanks!

This is good to know. Thank you!

With a long-only strategy you cannot get alpha-beta separation and 100% beta exposure.

If you’re happy with, say, a beta of 0.8, then you can accomplish it with a long-only strategy.

That makes sense now! Thank you!

My pleasure.