ETFs vs. Mutual Funds: Why Structure Shapes Returns

This week, I sat down with Brittany Christensen, Head of Business Development at Tidal Financial Group.

If you don’t know Tidal, here’s the quick pitch: they’re the ETF engine room. Tidal helps asset managers take a good idea and actually launch it - with the tech, infrastructure, compliance, distribution, and operational muscle that makes the ETF ecosystem run.

Brittany’s right in the middle, helping innovators turn strategies into scalable funds.

Here are some takeaways from our conversation:

• It’s not what you make, it’s what you keep. A strong market year looks great on paper, but if you’re in a mutual fund, year-end distributions can eat your gains thanks to the IRS. ETFs, on the other hand, are built to minimize those tax headaches.

• Mutual funds vs. ETFs: How you enter and exit matters. Mutual funds: When investors redeem, the fund may have to sell securities = capital gains for everyone. You can get taxed even if you don’t sell. ETFs: In-kind creations/redemptions with Authorized Participants mean no forced selling inside the fund.

• Section 351 isn’t just a dusty tax code. It’s the reason ETFs can be seeded, grown, and converted from model portfolios without triggering a tax event. Mutual funds use it at inception, ETFs use it every day.

• The growth story is real. Mutual funds still hold trillions, but ETF assets are growing YoY at a clip that shows where the puck is going.

Brittany breaks all of this down with clarity (and plenty of spice). If you’re an advisor, asset manager, or just someone trying to understand why ETFs keep winning, this episode is a must.

Connect with Brittany:

Connect with Brittany on LinkedIn: https://www.linkedin.com/in/brittany-christensen-63a617b7/

Tidal Financial Group: https://tidalfinancialgroup.com/

Timestamps:

(0:00) Intro

(0:22) Welcome, Brittany Christensen

(0:40) What Is Tidal Financial Group?

(2:00) Understanding ETFs

(4:33) Actively Managed ETFs

(9:13) Growing An ETF Is Not Easy

(12:30) Tax Impacts

(17:42) IRS Section 351 - Transferring from Mutual Funds into ETFs

(22:19) Avoidance vs. Deferral