It's a question of comparison. If two funds are both making money, but one is generating its profits in a way that increases your tax bill while the other one is allowing the gains to grow inside the fund and defers your tax bill till later, the second one is better. A mutual fund is a basket of stocks, bonds or other investments that are pooled together and invested all at once. That's because they have extremely low costs. And the less you pay to have your money managed, the more you get to keep.
Index funds are also very tax-efficient.
After Uncle Sam has his way with you each year you'll still have plenty left over. I also say, That's the way it's always been over the long term and the way it always will be. Them's long odds. The funds with super-high returns will flame out shortly after you buy them, making you feel like an idiot. For example, if you only own a US stock fund and the US stock market goes down, you're going to lose money too, no matter which kind of US stock fund you own.