[redwood]

It is not accurate to say that reinvesting dividends offers tax efficiency. Dividends are generally taxed in year whereas capital gains are only paid when an equity is sold. I think what you're actually referring to is a slightly different phenomenon which is that index ETFs have this handy ability to rebalance funds between stocks in the index in a way that doesn't itself lead to capital gains taxes and this is a definite tax advantage of ETFs.

Anyway I just wanted to call out that Dividends are considered tax inefficient which is why stock buy backs became popular