Have had thoughts about cashing in the funds...

[A HERETIC I AM]

12. You are correct, I was wrong! Should have taken the few seconds to Google first!

For some reason I was thinking that an in-house exchange didn't trigger a tax liability, but you are right, it does. ONLY IF THERE IS A GAIN however, which I'm sure you knew as well.

As you stated, none of this applies inside a tax qualified account, but the OP does not specify the account type nor the asset class for that matter.

https://finance.zacks.com/exchange-mutual-funds-still-pay-taxes-6287.html

One thing to bear in mind in this type of transaction is cost basis. If the Mutual Fund is set up to automatically buy additional shares with each capital gains, dividend or interest distribution, then the position will have multiple cost basis points. That will affect the taxation. For instance, if 10 shares were bought at $10.00 and 10 were bought at $11.00, the amount in tax per group of shares sold will vary.

Most Mutual Fund companies will assist in this pretty easily, by redeeming the shares for you on a "First In, First Out" basis so you aren't paying a higher capital gains rate then necessarily (short term vs long term)

Thanks for catching my fuck up! I am more than happy to be corrected as I feel this group should strive to provide absolutely accurate information.