Letter: State treasurer

February 25, 2014 

In his Feb. 7 guest opinion Ron Crane compares “interest” expectations of mutual fund holdings to interest accrued in a bank account. Perhaps this incorrect description is in keeping with his lifetime career as a politician, not a financier, sadly in charge of billions of dollars of Idaho money.

Mutual funds realize growth/loss based upon the value of the underlying assets. An investment in a mutual fund purchases asset shares. If assets are dividend paying, dividends likely will be reinvested back into the fund to purchase more shares. No “interest” accrues on the value of the shares.

For the retail investor, capital gains taxes are paid on realized gains if not a tax-advantaged account (retirement accounts). When one trades/transfers out of one fund to another, the value of the trade is at current asset value, not a past cost-basis or value.

As long as these treasury transfers were valued correctly at the time, and the portfolio is now accounted through current market value, it is what it is. We can only argue lack of oversight on the original trades. Unrealized gain that may have accrued via a different allocation cannot now be booked as a loss.


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