Why Active ETFs Spell Doom for Active Mutual Funds

People still don’t understand the tax benefits of ETFs.  I think they are beginning to, but the big difference will not be for indexes, which are often more tax efficient, but for active equity mutual funds.  Look at this article and see how much was lost to taxes for various funds, then realize that most ETFs don’t pay any meaningful capital gains.

Scott Cendrowski’s article from Fortune


If you then consider hedge funds, it is even worse.  Check out Wes’s piece Hedge Fund Hurt Locker, as well as our old piece access to hedge funds.

Great paper “Rules of Prudence for Individual Investors” by Mark Kritzman of Windham Capital.  Table below: