Broker Check

Differences Between a Mutual Fund and an ETF

April 09, 2021

On the outside, mutual funds and Exchange Traded Funds (ETFs) look quite similar. Both mutual funds and ETFs are basically prepackaged groupings of stocks, bonds, and/or possibly alternative investments. In fact, a mutual fund and an ETF can carry the same investments, yet their structures are inherently different. ETFs are relatively new (first appearing in 1993) and have since gained significant popularity. The words “mutual funds” and “ETF” are thrown around everywhere, but I’m not sure they’re fully understood by many investors. I started to write a blog post comparing the differences, but there were too many nuances, details, and exceptions to effectively describe the two investment vehicles succinctly, so I made a short list instead.