What is the difference between a mutual fund and an exchange traded fund?

A mutual fund and an exchange traded fund are two types of investment vehicles. While both provide investors with the ability to buy shares of an investment portfolio, there are some distinct differences between the two. A mutual fund is a type of pooled investment that is professionally managed by a fund manager. Investors purchase shares of the fund, and the fund manager will use that money to buy a variety of investments, such as stocks, bonds, and other securities. The fund manager makes all of the investment decisions and the fund does not trade directly on an exchange. An exchange traded fund (ETF) is a type of investment fund that is traded on a stock exchange. ETFs are a type of pooled investments, meaning that they are composed of multiple assets. Each ETF contains a basket of underlying assets, such as stocks, bonds, or commodities, that are used to track an index or other benchmark. Unlike mutual funds, ETFs can be traded at any time during the day, giving investors more flexibility when it comes to buying and selling shares. In North Carolina, investment law requires that both mutual funds and ETFs be registered with the North Carolina Office of the Secretary of State in order to operate legally in the state. Although both are useful investment vehicles, investors should carefully consider the differences between the two in order to make the best investment decisions.

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What is the difference between a mutual fund and an exchange traded fund?

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