An exchange-traded fund (ETF) and a mutual fund are both pooled investment funds, most of them registered under the Investment Company Act of 1940. The main difference is how you buy and sell them.
| ETF | Mutual fund | |
|---|---|---|
| Where it trades | On a stock exchange, during the day | With the fund company, once a day |
| Price | Market price, close to net asset value | Net asset value at the day's close |
| Minimum | One share (or a fraction, at some brokers) | Set by the fund, often $1,000 to $3,000 |
| Sales loads | Rare | Some classes charge them |
Same fund, two wrappers
Some funds offer both. VOO is the ETF class and VFIAX the Admiral class of the same Vanguard 500 Index Fund; they hold one portfolio and their prospectus expense ratios are 0.03% and 0.04%. See VOO vs VFIAX.
Structures that look like ETFs
- Unit investment trusts such as SPY trade like ETFs but cannot lend securities or reinvest dividends between distributions.
- Exchange-traded products that hold commodities or crypto, such as bitcoin trusts, are not registered under the 1940 Act. FundVersus labels them and explains the difference on their pages.
FundVersus does not say which wrapper suits you. It shows each fund's costs, holdings and returns so you can compare them. See the ETF directory and mutual fund directory.