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

A mutual fund and an exchange traded fund (ETF) are both types of investment funds that hold a basket of securities, such as stocks or bonds. The main difference between the two is in the way the fund is managed and traded. Mutual funds are typically managed by an investment company and are traded on the stock market. These funds are not actively managed, meaning that they are bought and sold at the market price at regular intervals. Mutual funds also typically impose a minimum investment amount and charge an additional fee, known as an expense ratio, for managing the fund. On the other hand, an ETF is actively managed and the holdings are traded on an exchange. ETFs are traded like stocks, meaning that they are bought and sold at the current market rate. ETFs do not have a minimum investment requirement and are generally cheaper to invest in than mutual funds due to a lower expense ratio. Overall, mutual funds and ETFs allow investors to invest in a diversified portfolio of stocks and bonds. Both options allow you to gain exposure to global securities markets with minimal effort. However, mutual funds tend to be more expensive and less liquid than ETFs. Therefore, depending on your investment goals, one may be more suitable than the other.

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

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