Consider an S&P 500 mutual fund. At any moment the holdings of the fund include unrealized cap gains that should eventually generate tax liability. Thus, for a potential investor, the fair value of the fund should equal to its NAV minus the expected cap gains tax liability.
Is there a way to approximately quantify this liability?
Note, we could easily compute the maximum liability, just multiply the cap gains by the investor's tax rate. But I guess the expected liability should be materially different.
P.S. For example current amount of unrealized cap gains in Vanguard SP 500 fund is 50%, which looks rather significant.