Wow, I just compared this fund against VOO (Vanguard S&P 500 ETF), and the "post-tax" difference is surprising:
pre-tax, 1 year performance is +4.40% vs 4.64% (proportional to expense ratio difference, but not an exact match)
post-tax, 1 year performance is -2.07% vs 3.83%, or a nearly 6% difference in 1 year performance!
http://performance.morningstar.com/fund/tax-analysis.action?t=WFIOX®ion=usa&culture=en_US"Wells Fargo Index offers well-diversified exposure to large-cap U.S. stocks, but it has high potential capital gains exposure."
I think "Wells Fargo Index Fund" is a very weird name for a fund. It's like saying you own a "Ford Car", where "car" is the name of your car. Most funds use something more specific, like "S&P 500" or "total stock market index fund".
If you're scared of this situation in particular, ETFs (exchange traded funds) could solve it. When a lot of people sell within a mutual fund, the fund has to deal with selling assets to meet redemptions. I don't know about Wells Fargo, but it's possible they didn't anticipate this situation well. With an ETF, when anyone sells, nobody else is impacted. It's just a sale on the stock market, two people changing ownership of shares.
Take a look at morningstar's summary / description of the next fund you buy, and look at the "tax" tab for information on the after-tax performance. There are numerous total stock market funds that could work. Since I like ETFs, I'll suggest a few:
VTI (Vanguard Total Stock Market ETF)
ITOT (iShares Total Stock Market ETF)
SCHB (Schwab US Broad Market ETF)