Christopher Grigat | Moment | Getty ImagesInvestors can generally reduce their tax losses in a portfolio by using exchange-traded funds over mutual funds, experts said.
"You'll have tax efficiency that a standard mutual fund is not going to be able to achieve, hands down," he said.
The same concept applies within a mutual fund: Mutual fund managers generate capital gains when they sell holdings within the fund.
Large-cap and small-cap "core" stocks also "benefit considerably," with about 85% to 90% of their returns coming from capital gains, Armour said.
However, there are instances in which passively managed funds can trade often, too, such as with so-called strategic beta funds, Armour said.
Persons:
Christopher Grigat, Bryan Armour, Charlie Fitzgerald III, Moisand Fitzgerald Tamayo, Armour, It's, Morningstar, Fitzgerald, Bonds
Organizations:
North America, Mutual, Taxpayers, CNBC
Locations:
Orlando , Florida, U.S
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