Index Mutual Fund vs ETF?

Question

which is better?
I know ETF have a less Expense ratio.
However the price of the Mutual fund is really the market? right?
Where the ETF could vary from the real market value? right?

Answer 1

If you select carefully, the MF and ETF have about the same charges and tracking accuracy.

I find ETFs much more convenient to buy and sell because you can execute an order at the click of the mouse you see the price you will get, while with MF you have forms to fill. However MF send you better account statements and performance data. I guess there is no clear winner and each will have its adherents.

Answer 2

Choosing between an index fund and an ETF is largely a flip of the coin if your purpose is long term investing, such as for retirement. Index funds and ETFs both tend to have low expenses--and some index funds (like Vanguard's) may have lower expenses than some ETFs. When you buy an ETF, you have to go through a broker and pay a commission. You also are likely to pay the ask price for the ETF, which includes an implicit transactional charge by the dealer selling the ETF. So index funds can sometimes be cheaper than ETFs.

It's true that the price of an ETF can vary from the value of its underlying holdings, for essentially short-term market-based reasons. If you buy and hold an ETF long term, these anomalies aren't likely to matter much. If you trade an ETF short term (not a great idea), you can take unexpected losses. The value of a mutual fund is based on the closing prices of the stocks it holds. So it is the real price as of 4:00 p.m. Eastern Time.

Answer 3

Lately I've really been liking some of the ETFs. Though there are many no load mutual funds, ETFs trade like stocks so no fees. That means their prices change throughout the day, whereas mutual funds are priced at market close.

Index funds are by far the most diversified way to earn consistent returns over time. And with many different index funds you can do well, particularly if you simply hate to take risk, and your goal is growth or capital preservation. I love them for those reasons.

If you are less risk averse, and have definite beliefs regarding a sector, commodity, industry or whatever, then ETFs can be a lot of fun. No ADR's and no messing around with futures. Indeed, diversity within a single ETF may be limited to diversifying within a sector. In the case of commodities, they may actually be trying to track the spot price of the commodity, or they may be tracking an aspect of the commodity market. An ETF alone will probably tend to be less correlated to a market index. They can be used effectively within a portfolio to hedge or speculate, so basically they can be quite volatile, and yes, the ETF will vary from any market index price.

Answer 4

ETFs are cheaper than mutual funds. ETFs have very low annual expenses, nearly 20 basis points or 0.2% less. As against this, actively managed mutual funds show average expenses exceeding 135 basis points (1.35%). This does not include the extra 2% - 5% as loads, 12(b)-1 marketing fees, transactions costs, and soft dollar expenses mutual funds, passed on to you but never informed, except in very fine print that nobody cares to read.
http://debts-to-wealth.com/category/Why-Invest-in-Exchange-Traded-Funds.html

Answer 5

it incredibly is an extremely exciting argument to make. ETFs are fee and tax efficient yet, will in no way beat their benchmark index with the aid of definition through working rate to run the ETF and monitoring blunders. Mutual funds different than listed mutual funds attempt to overcome the marketplace with the aid of actively coping with the portfolio. there is not something inherently solid approximately Mutual funds era. human beings purchase Mutual funds because of the fact they don’t have the skill to %. guy or woman shares and bonds themselves and don't have a portfolio (sources) sufficiently huge to have a assorted portfolio, so as that they pass away it to funds managers to %. for them. Mutual funds are large for persons that are basically commencing out and function constrained quantities of money to speculate on a many times going on foundation. the reason being that there are not any paying for and advertising expenses, you will get in for a nominal quantity $500-$a million,000 and function specialists coping with your funds. Assuming you %. solid mutual funds i.e., precise funds with long song documents of beneficial overall performance. i individually placed funds into ETFs, Mutual funds and guy or woman shares, bonds and thoughts. i like some mutual funds because of the fact they have a great song checklist of thrashing the marking over the long-term yet, you should be very selective. i like ETFs because of the fact they're undemanding to purchase/sell interday and laser guided slice of the marketplace in case you like that for the duration of your portfolio. i like to purchase guy or woman shares and bonds because of the fact in case you're solid a finding out on the wonderful one, you are able to overcome the marketplace.