I read on Investopedia that:
Comprehensively, ETFs usually generate fewer capital gain distributions overall which can make them somewhat more tax efficient than mutual funds.
Why do ETFs usually generate fewer capital gain distributions overall than mutual fund? Is that because, 1)
- Managers of a mutual fund must also buy and sell individual securities in a mutual fund when accommodating new shares and share redemptions.
- [whereas] ETFs have their own unique mechanism for buying and selling. ETFs use creation units which allow for the purchase and sale of assets in the fund collectively.
Mutual funds tend to the less actively managed than ETFs?
Some other reason(s)?