Index funds usually have lower capital gains on their investments and therefore are advantageous to investors in higher income tax brackets.

Question

Quizplus · Accepted Answer

Index funds are known for their passive investment approach and have lower turnover of stocks within the portfolio. As a result, they typically generate fewer capital gains than actively managed funds, making them a tax-efficient investment option for investors in higher income tax brackets who want to minimize their tax liabilities.

Index Funds Usually Have Lower Capital Gains on Their Investments