Statement 1: Exchange-Traded Funds (ETFs) are collections of investments like equities or bonds and are traded on stock exchanges.

This statement is correct. ETFs are investment funds that are traded on stock exchanges, just like individual stocks. They are made up of a collection of investments, such as equities (stocks) or bonds. Investors can buy and sell ETF shares throughout the trading day, similar to how they would trade individual stocks.

Statement 2: ETFs are always more tax-efficient than actively managed mutual funds.

This statement is incorrect. While ETFs can be tax-efficient, it is not always the case that they are more tax-efficient than actively managed mutual funds. The tax efficiency of an investment vehicle depends on various factors, including the specific investment strategy and the investor's individual tax situation.

Explanation:
Exchange-Traded Funds (ETFs)
- ETFs are investment funds that are traded on stock exchanges.
- They are made up of a collection of investments, such as equities (stocks) or bonds.
- ETF shares can be bought and sold throughout the trading day, similar to individual stocks.
- ETFs offer investors the opportunity to gain exposure to a diversified portfolio of investments in a single transaction.

Tax Efficiency of ETFs
- ETFs can be tax-efficient due to their unique structure.
- When an investor sells their ETF shares, they typically do not trigger capital gains taxes for other investors in the ETF.
- This is because the creation and redemption process of ETF shares allows for the transfer of securities without triggering taxable events.
- Additionally, ETFs tend to have lower turnover compared to actively managed mutual funds, which can result in fewer taxable events.
- However, it is important to note that not all ETFs are equally tax-efficient, and the tax implications can vary depending on the specific ETF and the investor's individual tax situation.

Tax Efficiency of Actively Managed Mutual Funds
- Actively managed mutual funds are investment funds that are managed by professional fund managers who actively make investment decisions.
- The tax efficiency of actively managed mutual funds can vary depending on the fund's investment strategy and turnover.
- Higher turnover can result in more taxable events, potentially increasing the tax liability for investors.
- Additionally, mutual funds may distribute capital gains to their shareholders, which can be taxable.

Conclusion
In conclusion, Statement 1 is correct as ETFs are collections of investments traded on stock exchanges. However, Statement 2 is incorrect as ETFs are not always more tax-efficient than actively managed mutual funds. The tax efficiency of both ETFs and mutual funds depends on various factors, including the specific investment strategy and the investor's individual tax situation.