Due to the index investment nature of ETFs, they tend to experience lower portfolio turnover, making them less likely to realize capital gains, which must be paid to investors on an annual basis. Additionally, by only allowing for the creation and redemption of funds by Authorized Participants at Creation Unit multiples, fewer taxable events occur in the day-to-day portfolio management. When fund creation/redemption transactions are of the in-kind security variety, the result is a non-taxable event for the fund.