Author - David John Marotta

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What Advantages Do Exchange-Traded Funds (EFTs) Have Over Mutual Funds?

What Advantages Do Exchange-Traded Funds (EFTs) Have Over Mutual Funds?

Mutual funds and exchange traded funds are similar types of investment vehicles. Both allow investors to diversify their investment across a large number of securities, but their differences give exchange traded funds several important advantages.

A mutual fund is an investment fund that pools money from many different investors to purchase specific securities. Flows into and out of the fund are valued each day at the 4pm closing of the stock market. Mutual fund managers later decide what to purchase or sell within the fund.

An Exchange Traded Fund (ETF) is an investment fund that trades throughout the day like …

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