What's the difference between a mutual fund and an ETF?

December 04, 2019

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What is the difference between a mutual fund and an ETF?

So, the main difference is in how they trade. ETFs basically trade like stocks where they're exchanging hands and priced thousands of times, every single day, between the open and close. Mutual funds are priced at the end of the trading day at their net asset value. Also, ETFs are generally more tax efficient than mutual funds.

Are ETFs passive or actively managed?

Well, both. Some of them follow indices and they account as some of the largest and oldest ETFs. Now those indices can follow the markets broadly or some stocks with specific attributes. The actively managed ETFs mirror a lot of mutual funds where they are portfolio managers that pick specific securities.

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