Finance

Difference Between ETF and Mutual Funds

Difference Between ETF and Mutual Funds

Introduction

Mutual funds and ETF offer investors pooled investment product options. Both the products can typically have anywhere from 100 to 3000 different individual securities within their funds. These investment products are built from the same pooled fund concept and are regulated by the same principle securities laws namely

›Securities Act 1933.

›Securities and Exchange Act 1934.

›Investment Company Act 1940.

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Meaning of ETF and Mutual Funds:

Similarities between ETF & MF:

  • Both the investment products involve holding portfolios of stocks/bonds.
  • Both can track indexes.
  • Both the products are open-ended.
  • Both types of investments are regulated by the same principle securities laws.

Key differences between ETF & MF:

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Final Thoughts

Both the instruments have many differences, but are similar in certain ways like both are portfolios containing stocks, other assets, and bonds that are traded through single funds managed by professional portfolio experts. Both the products have the ability to provide exposure to various market segments in a straightforward way which makes them useful tools in accumulating long-term wealth with a balanced and diversified portfolio.

Author: Urvi Surti

About the Author:

Urvi is a commerce graduate and has a keen interest in Finance. She has completed her Chartered Wealth Management (CWM) from the American Academy of Financial Management and is currently pursuing a career in Financial Risk Management (FRM).

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