My guess is that because the tips are enclosed inside a duct that there
is no vortex or boundary effects at the tips?


Although some VTOL aircraft have been designed with ducted fans, I think the
biggest reason for a lack of interest in that area is that you loose the
ability to perform emergency landings by autorotation. And that's a biggie

Why should a ducted fan/rotor not be capable of working in autorotation?
I never heard about that and cannot find a reason.