| Category |
Exchange-Traded Funds (ETFs) |
Mutual Funds |
| Bought and Sold |
On an exchange throughout the day |
Through mutual fund companies |
| Sales Charges |
None, though brokerage commissions apply |
May have sales loads, purchase, and redemption fees |
| Minimum Investments |
No minimum, can buy one share |
May have high minimum investments |
| Expense Ratios |
Traditionally low |
Dependent on management styles |
| Liquidity |
Intraday |
End of the day |
| Trading |
Intraday trading and special orders possible |
Trades executed once per day, no special trading orders |
| Consequences of Purchases and Sales |
Do not affect security prices |
Large transactions can impact security prices and fund NAV |
| Tax Implications |
Do not trigger capital gains or losses on underlying securities |
May trigger capital gains and impact tax efficiency |
| Transparency |
Fund holdings published daily |
Fund holdings typically published quarterly |
| Portfolio Investments |
Fully invested, no need to hold cash for redemptions |
Holds at least 5% in cash for redemptions |
