We have updated our Privacy Policy and Terms of Use for Eurasia Group and its affiliates, including GZERO Media, to clarify the types of data we collect, how we collect it, how we use data and with whom we share data. By using our website you consent to our Terms and Conditions and Privacy Policy, including the transfer of your personal data to the United States from your country of residence, and our use of cookies described in our Cookie Policy.
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.