Return of capital
Also written ROC.
Return of capital: not taxed when paid. It lowers cost basis, and the tax falls due on sale.
Definition
The part of a distribution not characterized as earnings for tax. It lowers the holder's cost basis, and the tax falls due when the shares are sold. The label records how a payout is taxed, not whether the fund earned it; Yield Sustainability answers that from the fund's NAV and distributions. The After-Tax Distribution Yield calculator shows the effect.
Definitions describe how YieldDesk reads the term. Nothing on this page is investment advice or a recommendation to buy, sell or hold.