ETF vs. Mutual Fund: Key Differences

February 18, 2025

Features	ETFs	Mutual Funds
Trading	Traded on stock exchanges throughout the day, just like stocks. This provides real-time pricing and flexibility.	Bought and sold through the fund company at the end of the trading day, with prices calculated at market close.
Management Style	Typically track a specific index, such as the S&P 500. However, actively managed ETFs also exist.	Can be actively managed, where a fund manager selects investments, or passively managed, tracking an index.
Costs	Generally have lower expense ratios than mutual funds due to their passive management style.	Often have higher expense ratios, especially actively managed funds.
Minimum Investment	No minimum investment beyond the cost of one share.	May require a minimum initial investment, which varies depending on the fund.
Transparency	Disclose their holdings daily, providing full transparency.	Typically disclose holdings with a delay, often monthly or quarterly.

Features

ETFs

Mutual Funds

Trading

Traded on stock exchanges throughout the day, just like stocks. This provides real-time pricing and flexibility.

Bought and sold through the fund company at the end of the trading day, with prices calculated at market close.

Management Style

Typically track a specific index, such as the S&P 500. However, actively managed ETFs also exist.

Can be actively managed, where a fund manager selects investments, or passively managed, tracking an index.

Costs

Generally have lower expense ratios than mutual funds due to their passive management style.

Often have higher expense ratios, especially actively managed funds.

Minimum Investment

No minimum investment beyond the cost of one share.

May require a minimum initial investment, which varies depending on the fund.

Transparency

Disclose their holdings daily, providing full transparency.

Typically disclose holdings with a delay, often monthly or quarterly.

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