Can someone walk me through the tax implications that make ETFs better than open ended mutual funds (from a tax perspective)?
Now I am studying for level 3 and this came up briefly in the curriculum. I am about 99% sure it is gloss-over material at level 3, which makes me almost certain that you don’t need to be worrying about this for level 1. There are more important items to be spending your final month on than this…
If you are dying to know, it is because ETFs can match up buyers and sellers more efficiently thus they don’t have to sell the stock for cash and recognize a sale.
Maybe as a followup question, why is it better to invest in open ended mutual funds vs. ETFs when choosing to invest in less liquid markets?