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 managed and bought and sold. A mutual fund is managed by a professional fund manager, and it is bought and sold like a stock. An ETF is a basket of stocks that are traded on an exchange. It is bought and sold like a stock, but it is not actively managed by a fund manager. Mutual funds are typically diversified with investments in stocks, bonds, and other securities. The fund manager monitors the investments in the fund and buys and sells securities to keep the fund at the desired level of risk and return. ETF’s are passively managed and are typically made up of stocks and bonds from a particular industry or market sector. The goal of an ETF is to track the performance of the underlying index and not to generate a profit for a fund manager. Mutual funds typically require a minimum initial investment, and investors pay a fee to the fund manager for services. ETF’s, on the other hand, have no minimum investment requirement, and investors pay only a transaction fee when they buy and sell the ETF. Mutual funds and ETF’s offer investors different levels of returns and risk profiles. Mutual funds tend to be more diversified, which may provide investors with more potential for return. ETF’s are more focused, which may provide investors with greater exposure to certain industries or sectors. Both types of investments offer investors potential for long-term growth, but it is important to understand the differences between them before investing.

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

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