Do ETFs pay capital gains distributions?

ETFs can distribute capital gains, but many equity index ETFs tend to distribute fewer capital gains than many mutual funds because of how creations/redemptions can be handled in-kind.

However, capital gains distributions can still happen. For example, if an ETF must sell holdings due to index changes, strategy shifts, or portfolio management needs, it can realize gains inside the fund.

In a taxable account, distributions matter. If you're tax-sensitive, check the fund's historical capital gains distributions (if any), and remember you'll also owe capital gains tax when you personally sell shares at a gain.