Quote:
Originally Posted by spinner1001
Actively-managed non-index mutual funds (e.g., a Health Care mutual fund) are often LESS tax efficient for individual investors than a matching ETF. (Unlike, say, a passive S&P 500 index mutual fund.)
Managers of actively-managed non-index _mutual funds_ generally trade in and out and fund investors can get big taxable capital gain distributions from the mutual fund especially in a rising market even when they are buy-and-hold fund investors. Capital gains from _manager_ trading of a mutual fund get passed along to fund investors even when an investor has not sold their fund holding.
This tax treatment generally differs from comparable ETFs as ETF investors see the capital gains when they (not the fund managers) sell.
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Thanks. I neglected to say that I never invest in actively managed, non-index funds. I only invest in index funds, and I am mostly a buy and hold investor. I am just not interested in paying extra fees to a stock picker who manages a stock or bond fund.