ETFs are set up to protect investors from capital gains taxes better than most mutual funds can.

Question

Quizplus · Accepted Answer

ETFs are typically structured as passive investment vehicles that trade on an exchange like a stock. This structure allows ETFs to be more tax efficient than many mutual funds because they generally have lower turnover and do not have to sell assets to meet investor redemptions. As a result, ETF investors may be subject to fewer capital gains taxes than investors in comparable mutual funds.

ETFs Are Set Up to Protect Investors from Capital Gains