Which of the following statements is generally true when comparing mutual funds to exchange traded funds?

Question

Quizplus · Accepted Answer

Exchange traded funds typically have lower turnover rates than mutual funds, which leads to less capital gains distributions and therefore greater tax efficiency. However, the specific tax efficiency of a fund will also depend on the investments it holds, so D is not incorrect but less comprehensive. B is incorrect as mutual funds tend to have higher expenses and turnover rates, leading to lower tax efficiency. C is not entirely true as there are differences in tax efficiency between the two types of funds.

Which of the Following Statements Is Generally True When Comparing