Evaluating the Tax Efficiency of ETFs and Mutual Funds

Exchange-traded funds tend to be more tax-efficient than mutual funds for strategic and structural reasons: They often employ low-turnover strategies, and their in-kind redemption process creates cost benefits. In this study, our analysts unpack the nuances of this tax efficiency and measure how it compares to the efficiency of mutual funds.

In this report, you will learn:
  • How inflows and outflows affect funds’ tax efficiency
  • Our analysis of the impact of capital gains distributions on funds
  • Trends in tax efficiency for funds that track market-cap-weighted indexes

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