Another good explanation: http://www.cnbc.com/2014/11/26/beware-of-the-year-end-mutual...

If these securities have been held for <1 year, their gain/loss goes into the short term bucket. So losses (in this case, writedowns) can offset the size of distribution, which is a bad deal for investors.

To a personal investor (e.g. mentioned in the world of WealthFront/Betterment), this is 'tax loss harvesting'.