What is the difference between a mutual fund and an exchange-traded fund (ETF)?

The difference between a mutual fund and an exchange-traded fund (ETF) is the way they are structured and how they are traded. A mutual fund is a professionally managed investment where an investor’s money is pooled with other investors’ money and invested in different types of investments such as stocks, bonds, and commodities. The fund is managed by an investment professional who makes decisions on what investments to make and when to sell. Mutual funds are bought and sold through brokerage firms on a price determined at the end of the trading day. Exchange-traded funds (ETFs) are similar to mutual funds, but they are traded on an exchange and their prices change throughout the day based on supply and demand. ETFs are made up of a range of different investments that are actively managed by a portfolio manager. ETFs are usually more cost-effective than mutual funds, because the fund managers don’t have to actively manage the holdings of the fund. Another difference between the two types of investments is the tax implications. Mutual funds are subject to taxation on income and capital gains, but ETFs are not subject to the same level of taxation. This may be an important consideration for investors who are trying to minimize their taxes. Overall, mutual funds and ETFs are both popular investment options, but there are important differences between the two that should be considered when making investment decisions.

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What is the difference between a mutual fund and an exchange-traded fund (ETF)?

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