For the large-cap blend category, the five-year average distribution drops from 1.92% in active mutual funds to 0.16% in passive mutual funds and 0.00% in ETFs.
Additionally, it should be noted that conventional measures of cost, such as expense ratios, tracking errors, indexing methodologies, could exceed normal tax costs. Consequently, the measurable “tax efficiency” could come with lower after tax returns.
For more information on ETF taxes, visit our taxes category.
Max Chen contributed to this article.