In other words, they’re designed to automatically track a market index, like the S&P 500. On the flip side, you may need to pay a trading commission when you invest in an ETF, something that usually doesn’t apply to mutual funds.”Īlso, most ETFs are passively managed. “ETFs give you more control over when to enter the market and at what price. “This means there’s less flexibility with regard to timing and price with mutual funds,” says Erickson. In contrast, mutual funds are priced and traded at the end of each trading day based on the fund’s net asset value (NAV). ETFs can be bought and sold intra-day, just like any security. Even though they contain a basket of securities, ETFs are traded like a single security on a major U.S. The differences between ETFs and mutual funds start with how they’re constructed and traded. Business savings and money market accountsĮTFs vs.Find a financial advisor or wealth specialist.
