Ola Oso
Exchange Traded Funds and Mutual Funds
Differences
Exchange Traded Funds
Trade during trading day (ETFS)
Trade at closing NAV (MUTUAL FUNDS)
Low operating expenses (EFTS)
Operating expenses vary (MUTUAL FUNDS)
No investment minimums (EFTS)
Most have investment minimums (MUTUAL FUNDS)
Tax-efficient (EFTS)
Less tax-efficient (MUTUAL FUNDS)
No sales loads(EFTS)
May have sales load (MUTUAL FUNDS)
An ETF, or exchange traded fund, is a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund
Mutual Funds
an investment program funded by shareholders that trades in diversified holdings and is professionally managed.
SIMILARITIES
Less risk through more diversification
One ETF or mutual fund can invest in hundreds (sometimes thousands) of stocks or bonds in a single fund.
Professional management
You don't have to keep track of every security your fund owns. The fund is managed by experts who take care of that for you
Disavantages of Mutual Funds
Advantages Mutual Funds
Advanced Portfolio Management
High Expense Ratios and Sales Charges
Dividend Reinvestment
Management Abuses
Advantages Of ETFS
Tax Inefficiency
Disadvantages of ETFS
Convenience and Fair Pricing
Diversification
May Be Limited to Larger Companies
Poor Trade Execution
Intraday Pricing Might Be Overkill
Risk Reduction (Safety)
Lower Fees Compared to Managed Funds
Bid-Ask Spread Can Be Large
Trades Like a Stock
Dividends Are Reinvested Immediately
Costs Could Actually Be Higher
Lower Discount or Premium in Price
Dividend Yields
Capital Gains Tax Exposure Is Limited