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Mutual Funds and ETFs


Comparing ETFs and open-ended mutual funds  

Exchange-traded funds

Open-ended mutual funds

Buying and selling
  • ETFs are continuously priced throughout the trading day, and investors buy and sell them in the secondary market (i.e., the stock market)
  • ETF investors place orders through a brokerage account; this allows them to place different types of orders such as limit, stop-limit or short-sale, and to trade on margin 
  • Investors transact directly with the mutual fund company
  • Mutual fund investing does not require a brokerage account
  • Investors cannot buy mutual funds on margin, or set price limit orders
Pricing
 
  • Share prices fluctuate during the day on a stock exchange and have bid and ask prices
  • Prices may trade above (premium) or below (discount) the NAV
  • All shareholder orders receive the same daily price – the NAV – calculated at 4:00 p.m. Eastern time

 

 

Related materials

ETF whitepapers

Frequently asked questions

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