What's the diffirence between an ETF (Exchage Traded Fund) and a Closed End Mutual Fund, if any?

Answer 1

The main difference is that ETFs track an index, and for various reasons they trade at almost exactly their NAV (Net Asset Value, the value of the stocks held by the fund).

Closed end funds are like ETFs in that their shares trade on the open market, but they don't follow an index. They are "actively managed." For various reasons, they may trade at a "premium" (the share price is higher than the NAV) or a "discount."

Answer 2

ETFs and mutual funds are both investment vehicles that enable an investor to invest in bonds, stocks, etc. In general, ETFs are passively managed and mutual funds can be both passively or actively managed. However, there is a trend towards more actively managed ETFs as they become a larger portion of the market. Right now, the major differences are these: 1. You can trade ETFs as you would a stock. That is, you can buy and sell throughout the day. You can short an ETF. With mutual funds, you can only buy at the end of the day at NAV and you cannot short a mutual fund. 2. ETFs generally have lower expenses than mutual funds. Some mutual funds though are pretty close to the ETF expenses so the difference may be moot. 3. Mutual funds carry capital gains and losses in the funds themselves. So if a lot of investors sell out of the mutual fund and the fund incurs a lot of capital gains, the remaining shareholders pay. Same for losses except the remaining shareholders benefit. For ETFs, they swap out the stocks when a purchase or sell transaction is made. That means the person doing the transaction has to shoulder the burden of any capital gains and losses, not the remaining shareholders.

Answer 3

ETFs invest only in liquid securities, so their NAV can be established intraday if necessary. Closed-end funds may invest in less liquid assets (for example, there are funds that invest in loans), so their NAVs are stale, since there are no current prices for some of their assets.