What is the difference between a mutual fund and an ETF (Exchange Traded Fund)?

A mutual fund and an ETF (Exchange Traded Fund) are two different types of investments that exist in New York. Both products allow investors to diversify their investment portfolios by buying into a larger basket of stocks, bonds, and other assets. The main difference between a mutual fund and an ETF is how they are structured. Mutual funds are actively managed, meaning that a fund manager purchases and sells securities in order to maximize return. On the other hand, ETFs are passively managed and track a specific index or benchmark. This means that the fund manager does not actively invest but instead replicates the performance of the chosen index. Another difference is that mutual funds are priced once per day at the close of the stock market. ETFs, however, are traded all day like stocks while the pricing is determined by the demand and supply of the ETF. Mutual funds also have higher fees, while ETFs typically have much lower fees. Finally, ETFs are more tax efficient than mutual funds because of their trade structure. Overall, investors can choose either a mutual fund or an ETF depending on their goals and financial situation. Before making a decision, it is important for investors to understand the differences between the two options and how they can help reach their financial goals.

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What is the difference between a mutual fund and an ETF (Exchange Traded Fund)?

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