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Question

Viha KExplainer

Asked: October 25, 20242024-10-25T08:24:50+05:30 2024-10-25T08:24:50+05:30ETF Investing

How are ETFs different from mutual funds?

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vihan123 · Answer 1 · 2024-10-25T18:52:00+05:30

Trading Flexibility: ETFs are traded on exchanges throughout the day, allowing buying and selling at market prices. Mutual funds, however, are bought and sold only at the end of the trading day based on their Net Asset Value (NAV).
Lower Fees: ETFs typically have lower management fees compared to mutual funds due to a passive management style.
Minimum Investment: ETFs can be bought in single units on the stock exchange, so there’s usually no minimum investment requirement. Mutual funds often have a minimum investment threshold.
Tax Efficiency: ETFs tend to be more tax-efficient since they experience fewer taxable events due to the “in-kind” creation and redemption process.
Transparency: ETFs disclose holdings daily, giving investors a clear view of where their money is invested, while mutual funds usually report holdings quarterly.