Mutual funds and exchange-traded funds (ETFs) are both popular investment vehicles that pool money from many investors to buy a diversified portfolio of assets. However, they have significant differences in terms of structure, management, trading, fees, and tax implications. Here is a detailed comparison of mutual funds and ETFs:
Structure and Management
Mutual Funds:
Active vs. Passive Management: Mutual funds can be actively or passively managed. Active mutual funds have managers who make decisions about how to allocate assets in an attempt to outperform the market. Passive mutual funds, or index funds, aim to replicate the performance of a specific index.Investment Minimums: Mutual funds often require a minimum initial investment, which can range from a few hundred to several thousand dollars.