Much has been made recently of vice presidential nominee Paul Ryan's investments. As it turns out, Ryan is an avid stock and mutual fund investor.
Some outlets have used Ryan's investment disclosures to highlight his status as the financial everyman. "Meet the Ryans, scattered mutual fund investors like the rest of us," read a Reuters headline, which was representative of much of the coverage of the Ryan family's holdings.
But is Ryan a smart investor? Here, financial journalists have disagreed. CNN Money's Maureen Farrell praised Ryan's financial acumen, writing, "Ryan appears to be a savvy investor. The majority of the mostly large-cap stocks he owned in 2011 are on a tear in 2012. According to Ryan's 2011 financial disclosure statements released by The Center for Responsive Politics, he owns a diversified group of large cap stocks that are solidly beating the market."
Nonetheless, others have been quick to give Ryan some (perhaps unwanted) investing advice. "Paul Ryan and his wife have accumulated far more savings than the typical American couple, but they still face an all-too-common investing problem: holding an unwieldy collection of mutual funds," Reuters reporter Ross Kerber wrote.
"The strategy of the Ryans—or their financial advisers—resembles the approach taken by all-too-many investors who latch onto one promising fund and then buy another that strikes their fancy. Holding too many funds, investors lose control of their portfolios and pay unnecessary expenses," observed Stan Luxenberg in an article for The Street.
Luxenberg even offered Ryan some rather specific tips. He suggested, for instance, that Ryan dump his position in Nuveen Intermediate Term Bond fund (symbol: FAIIX) because his stake in PIMCO Total Return (PTTAX) gave him sufficient exposure to that corner of the bond market.
Even as Ryan's investing process has gone under the microscope, though, his investing philosophy—at least as it pertains to mutual funds—has gotten relatively little attention. Namely, Ryan's role in one of the longest-running mutual fund controversies has pretty much flown under the radar.
In Congress, Ryan has been a supporter of the Generate Retirement Ownership Through Long-Term Holding (GROWTH) Act. The bill, which has long been stalled in a legislative no-man's land, seeks to allow mutual fund investors to defer their capital-gains taxes until they sell their positions.
The way capital-gains taxes currently work, taxes are triggered whenever a fund sells a position at a profit. Investors pay taxes regardless of whether they pocket the profits or reinvest them in the fund.
The bill has perennially been reintroduced in Congress, but to date it hasn't gone anywhere. For instance, Ryan, who inherited the proposal from another legislator, tried to get it through Congress in 2009.
At the time, he seemed at a loss to explain why the bill hasn't become law. "It's bipartisan; it's always been bipartisan. The way I see it, mutual funds have democratized capitalism for workers, and they've put sophisticated investing within reach of every American. And the whole notion of capital-gains taxes is you get taxed when you realize the gain, and that notion ought to be replicated within mutual funds," he told U.S. News back in 2009. "So I find very little resistance to it in Congress. It's just finding the right legislative vehicle and finding the physical space to get this done."
Unlike many of Ryan's proposals, his pet mutual fund project hasn't been the subject of widespread contention. Indeed, most who have spoken publicly about it have supported it. This includes representatives of the fund industry. "A GROWTH Act would encourage savings by allowing mutual fund shareholders to keep more of their own money working for them longer by deferring capital gains taxes until they actually sell their investment, and would provide a sensible way for millions of Americans to create a more secure financial future for themselves and their families," the Investment Company Institute says on its website.
Non-partisan commentators such as Karen Dolan have agreed. "[T]he tax treatment of mutual funds is arcane and needlessly complex," she wrote in an article for Morningstar.
While Ryan's holdings—and the PIMCO v. Nuveen debate—are certainly interesting, the GROWTH Act is of far more consequence to fund investors. Maybe it's a good idea. Maybe it's a bad one. But with looming tax debates, now is as good of a time as any to start thinking about it.
Clarified on 08/30/2012: A previous version of this story misstated Karen Dolan's employment status with Morningstar.