Non taxable stock fund?

There is a type of fund that you can invest in that buys stocks and when it sells appreciated stocks, reinvests the proceed in other stocks so that there are no tax consequeses for the fund holder. What type of fund is this?

Thanks

Reinvesting proceeds does not avoid income tax. Even though you never get the money, it is still taxed. Just like interest earned at a bank that you "reinvest" in the account, it is all taxable. There are however, certain funds, usually municipal bond funds, that create tax free income interest. The problem is their rate of return is lower than taxable funds. In many cases, once you calculate the rate of return after income tax, both are about the same for most people.

Reinvesting proceeds does not avoid CAPITAL GAINS (not income) tax. But there are "tax-advantaged" or "tax-managed" mutual funds that sell their losers to counteract the gains from their winners. Most large mutual fund families have this type of fund. To keep income tax down, they also buy more growth stocks, usually with lower dividends than the stocks value funds or non tax managed funds would buy.

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