Tags: ETF, Mutual Fund, Stock, Asset, Tax, Markets, Investment, Trade

What is the difference between ETFs and Mutual Index Funds?

30 July 2020



ETF stands for an exchange-traded fund. Mutual funds and ETFs have many similarities. For instance, both enable the investors to diversify and both also consist of the mix of different assets. Join us to understand the key aspects that make them different (i.e taxes, stock exchanges, trade, markets). We hope that after this article you will be able to make an inform decision about your funds investment!

Click here to see the best ETF Stocks to Buy Right Now!

What is an ETF? 

Simply put it is a bundle of securities (for example stocks) that you can sell or buy on a stock exchange through a brokerage firm. Consequently it can be said that these are extremely valuable for individual investors as they offer a number of benefits and can help an investor achieve their goal. Having an innovative structure may help an investor avoid short-term capital gains taxes, short markets and gain leverage. For information about how Tax Planning can help you optimize your profits and savings click here


Nowadays the total amount invested in various structures exceeds $1 trillion according to some estimates. Approximately one thousand ETF products are sold on stock exchanges in the USA. There are many different types of ETF products.


Some of them are: Bond ETFs, Commodity ETFs, Foreign market ETFs, Inverse ETFs etc. Similarly to a stock, an ETF has a ticker symbol. It can be bought or sold when the stock exchange is open. Just like a stock (however there are some differences as well).

Major similarities and differences between ETF & Mutual Funds

Difference between ETF vs Index Fund

There are a lot of similarities between the ETFs and mutual funds. Both of them enable the investors to diversify and consist of the mix of different assets. However, there are some significant differences in their management.


Mutual funds can be purchased based on a calculated price at the end of the day. It can be traded in a similar manner to a stock. As well as this an ETF is usually managed passively and based on a market index while the manager of the mutual fund makes active decisions about the allocation of assets within the fund.

Start your Custom Asset Allocation portfolio TODAY with the award winning team Boracchia Wiviott Wealth Partners!

It also tend to have lower expense ratios and lower fees than mutual funds (due to their mostly passive management). Moreover, the minimum investment requirement is usually higher in the case of a mutual fund than in case of an ETF. The requirements differ in accordance with the company and the type of fund. In addition, because of the way ETFs are created and redeemed they are more tax efficient than mutual funds.

Types of Mutual funds and ETFs. 


On the other hand, there are two types of mutual funds: Open and close funds. Open mutual funds are the majority. In case of such funds companies and the investors buy and sell the fund shares directly between themselves.


Mutual funds do not have a limit on the number of shares they can issue. More shares are issued as more investors continue to buy the fund. Closed-end funds issue a specific number of shares. They do not issue new funds even if the investors’ demand grows.

In addition there are three legal classifications for ETFs:

  1. Exchange-Traded Open-End Index Mutual Fund. Derivatives may be used in the fund. Securities lending is permitted. Shareholders receive payment every quarter
  2. Exchange-Traded Unit Investment Trust (UIT). These must limit investments to 25% or less in a single issue. They also have to set weighing limits to both non-diversified as well as diversified funds. UITs pay dividends quarterly and do not reinvest the dividends automatically.
  3. Exchange-Traded Grantor Trust resembles a close-ended fund.  The shareholders have voting rights. Dividends are paid directly to shareholders and not reinvested.

It is a common belief that new and unusual ETFs will be introduced in the near future since innovation has always been the hallmark of this industry ever since its beginning. That being said, you should investigate, you’d like to invest in very carefully as not all of them are created equal. 


To conclude, both mutual funds and ETFs offer investors bundles, but they do have some differences some of which can be presented in the ETF vs Mutual Funds chart below:

etf vs mutual stocks

You can look forward to peace of mind as a subscriber of our Investing Profits Pro Stock Market Investing Portfolio subscriptions

Remember that EFTs are an excellent investment opportunity, it is not without risk. Kindly consult with your Financial Planner before investing, especially if you have a taxed account. For more information on exchaged-traded funds and mutual funds investments you can read this article.

Start making headway on your money​ and create your custom Financial Plan with the award winning team

Boracchia Wiviott Wealth Partners  

Disclosure: Information presented is for educational purposes only. Investment, insurance, planning, real estate involve risk and unless otherwise stated, are not guaranteed. Be sure to consult with a qualified insurance agent such as Boracchia Wiviott Insurance Services, LLC, a qualified financial advisor such as Boracchia Wiviott Wealth Partners, LLC, tax professional, or attorney before implementing any strategy or recommendation discussed herein.

Share this post on:

Lea Wiviott Boracchia, Co-Founder, FinancialPlans.Info and InvestingProfits.Pro, both apart of the renowned Boracchia Wiviott Wealth Partners

We are a registered investment advisory focused on accessible wealth planning for everyone. Our mission is to help women, men and people of all ages, races, locations, and anyone plan and secure their most successful future. We were originally established in 2005 by way of 3 firms before my husband Marc and I registered our independent advisory in California.


  • Stock Market Trading!

    ETF and Mutual Funds for Investment

    30 July 2020

  • Stock Market Trading!

    Asset Allocation: The game changer in knowing the best stocks to buy right now!

    14 October 2020




Stay focused on your goals with Boracchia Wiviott Wealth Partners through our 

eBooks, financial planning, newsletter subscription services, segment expertise, private wealth management, fee based planning, and industry leadership!

Copyright © 2020 by Boracchia Wiviott Wealth Partners.  All Rights Reserved.

Past performance is not a predictor of future results. Individual investment results may vary. All investing involves risk of loss. Due to the robust nature of the internet, we cannot be responsible for any information provided, you must verify the accuracy and feasibility of it all. For our full list of policies you agree to in using our site please click on policies.

Investment Portfolio Subscriptions, Classes & Resources

Commodities & Material Investing Stock Market Portfolio  


Communication Services, Consumer Discretionary, & Marijuana Investing Stock Market Portfolio  


Consumer Staple, Real Estate, & Utilities Investing Stock Market Portfolio   


Energy, Financial, & Industrial Investing Stock Market Portfolio


ETF Stock Investment Portfolio to Buy


Fixed Income Investment Bond Portfolio


Forex and Currency Investment

Global Developed & Emerging Investing Stock Market Portfolio


Gold and Silver Portfolio of these Best Stocks to Buy Right Now


Healthcare, Biotechnology, & Pharmaceutical Portfolio of Best Stocks to Buy Today


Software, Information Technology & Semiconductor Investing Stock Market Portfolio


Investing Profits Pros, Unique Do It Yourself Investment Ideas for Everyone!


All Wealth, Stock Market & Real Estate Master Classes 

Risk Management, Annuities & Insurance Ideas including Whole Life Insurance


Residential & Commercial Real Estate Agent Expertise


Fee - Based Private Wealth Management for Individuals, Families and Businesses


Start Your Custom Financial Plan Today!


How to Save Money for Retirement Planning, Compute the Proper Retirement Age & More BLOG - Financial Plans Information 


The Best Stocks to Buy Right Now in the Stock Market & Cryptocurrency BLOG - Investing ProfitsPros


Work at Home Jobs for Moms, How to Make Money Online & Investing in Real Estate BLOG - My Best Lifestyle Experts


Growth Mindset & More on the Stock Market & How to Make Money Online BLOG - Success Striver


Qualified Tax Planning


Investments, Wealth and Financial Planning Resources 





Lifestyle Experts and Financial Planners, $1mil + by 30, Trailblazer of Minorities & Women in Real Estate & Investing in the Stock Market. Mompreneur. Dadpreneur. Private wealth meets your favorite motivational speaker with actionable items you can make money online from efficiently! I look forward to connecting with more badass women and men, ;) to your your best life with us as your leaders to which are the best stocks to buy right now, Lea, Marc & Team


Customer Service Center

Contact Your Boracchia Wiviott Wealth Partners

M – F | 9 AM – 5 PM PST



Within the United States: (424) 625 - 8943                


If you are outside of the U.S. please dial +001 (424) 625 - 8943  


Terms of Use


Accessibility Policy


Disclosure Policy


Privacy Policy


Affiliate Program - We have one,  it is run through Kartra! Please join others in helping build wealth for you & your community. If it's easier, please email Team@MyBestLifestyle.Pro and we'll send you the link, we look forward to hearing from you! Thanks!

Boracchia Wiviott Wealth Partners LLC, your best Financial Advisors!!