Why do people insist on bringing up cap gains distributions for funds as an issue when you can just go and buy an ETF instead?
For all the reasons why one might choose an index fund over its corresponding ETF - e.g. the ability to buy and sell partial shares.
Is avoiding average $20-$30 sitting around in your account really worth all that hassle? (Hint: unless you only tiny amounts invested, then no.)
For me and many posters here, it is.
ETFs aren't particularly practical for tax-advantaged accounts with strict caps (e.g. IRAs) because purchasing in full shares means you will leave headspace behind.
Personally, after contributing our family max to the HSA, IRAs and enough to our 401(k)s we have little left to invest, so buying in full shares into VOO (at $250+/share) in our taxable accounts also makes little sense. We're not terribly worried about distributions given our income and tax bracket.
Others - particularly those starting out their journey - the convenience of index funds outweigh the benefits of ETFs. For example, for many its far simpler to autocontribute $100 each week than to buy full shares less frequently and to not know what the cost of htose shares will be month(s) in advance when budgeting.
Both ETFs and index funds are good, but neither can claim to be the best for all clients.