<P> Scenario: An investor entered a mutual fund during the middle of the year and experienced an overall loss for the next 6 months . The mutual fund itself sold securities for a gain for the year, therefore must declare a capital gains distribution . The IRS would require the investor to pay tax on the capital gains distribution, regardless of the overall loss . </P> <P> A small investor selling an ETF to another investor does not cause a redemption on ETF itself; therefore, ETFs are more immune to the effect of forced redemptions causing realized capital gains . </P>

Who created the first index and under what circumstances