Mutual FundsTo be taxed as a regulated investment company (RIC), mutual funds must meet several requirements. In addition to daily transparency and intra-day pricing, ETFs have a distinct tax advantage over mutual funds. ETFs Versus Mutual Funds: Taxation OverviewETFs hold an advantage over mutual funds. Referring to the illustration below (Mutual Fund Structure), when a shareholder invests in a mutual fund, they do so by exchanging cash for shares of the fund. Despite the similarity in the taxation of mutual funds and ETFs, the structural difference and potential absence of long-term capital gains in ETFs makes them a compelling investment vehicle.

Source: Forbes January 31, 2020 21:22 UTC