ETF vs Mutual Fund: What’s the Difference?

The ETF is leading the charge with innovation, tech, and ease of trading with lower costs. So what's the difference between the ETF vs Mutual Fund.

Many of the ETFs discussed stem from famous mutual funds or are made up to track an index.

What is an ETF?

ETF stands for exchange-traded funds. ETFs are a way to hold an extensive portfolio of different companies. They are like a mutual fund but are traded throughout the day like a stock.

What is a Mutual Fund?

A mutual fund is a type of fund that hosts a pool of securities for a specific allocation. They are centered around growth, sectors, or another kind of allocation.

What are the Differences Between an ETF vs Mutual Fund?

Here are a couple of differences between the ETF vs Mutual Fund.

1. Active Management vs Passive Management

The mutual fund is usually actively managed, and their fund manager seeks to beat an index like the S&P 500. ETFs usually are more passively managed.

2. The Fund Expense Ratios

An expense ratio is an expense that is associated with the fund. If an expense ratio of 0.03%. That means it costs you $3 for every $10,000 invested into the ETF.

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