Exchange-traded funds are less tax efficient than many other mutual funds.

Question

Quizplus · Accepted Answer

Exchange-traded funds (ETFs) are known to be more tax efficient than many other mutual funds because of their unique structure. ETFs typically have lower turnover rates, which results in fewer capital gains distributions and lower tax liabilities for the investors. Additionally, ETFs can use in-kind transfers to minimize taxable events when re-balancing their portfolios. Therefore, ETFs are generally considered to be tax-efficient investment vehicles compared to traditional mutual funds.

Exchange-Traded Funds Are Less Tax Efficient Than Many Other Mutual