[quote=“ratbert2k, post:39, topic:3475”]
There are dividends every quarter, as well as capital gains when the fund sells shares of something.
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My understanding is that Vanguard has been able to avoid having to distribute capital gains from internal sales of shares in some index mutual funds by setting up the ETF as a share class of the mutual fund. For example VTI, The Total Stock market Index ETF is a share class of VTSAX, the Total Stock Market Index Fund. This setup has enabled Vanguard to “flush” the mutual fund capital gains into the ETF. The link shows that Vanguard has not had any capital gains in VTSAX since they set up the arrangement in 2000.
I believe that Vanguards patent expires this year so perhaps other companies may be able to use the same process.