Yes, but the investor will pay more in taxes when they sell the actual ETF. It's more like deferring taxes than avoiding them.

Think of it this way, if the fund paid these taxes when they sell their various holdings, that less tax amount would be baked into the ETF valution, which would carry over to a smaller tax bill when an investor sells their ETF shares and pays taxes.

That's still advantageous in many ways, but I think people in this topic are thinking this is some kind of complete tax avoidance. It isn't.