Ask an Advisor
Have a question about finance?
What are the pros and cons of ETFs vs mutual funds? How should I think about researching these instruments?
We generally prefer to use exchange traded funds (ETFs), but there are still certain circumstances in which mutual funds are a better choice for our customer accounts. First, let’s talk about the plusses of exchange traded funds, index funds in particular:
1. Because exchanged traded funds are stocks and trade on an exchange, they can be purchased or sold with limit orders during the day, at known prices, rather than executed after hours at a net asset value to be determined as you with a mutual fund(open ended fund).
2. The ETF fu...
As with all investment products, there are pros and cons to using ETFs. Here is my take:
The pros of ETFs:ETFs generally employ an objective, systematic investment strategy that allows an investor to track an underlying benchmark.
ETFs typically have low management fees. For broad index ETFs, fees and expenses are generally less than 50bps.
ETFs require no minimum holding period. Some mutual funds impose fees on investors who hold fund investments for less than a designated time period, such as 60 or 90 da...
James and Lyman do an excellent job of outlining the advantages and possible disadvantages of ETFs. Please read both responses. Some additional points:
1. Custodial broker dealers are now offering transaction free ETFs. TD Ameritrade our custodian offers about 100 ETF that trade with no transaction fee. Generally the transaction free trades need to be held for a period of time to remain transaction free when sold. This is done to discourage day trading with these ETFs. These no transaction fee ...
Before I answer the question, in the interest of full disclosure, Index Strategy Advisors is a Registered Investment Advisory firm that specializes in the design and management of Exchange Traded Fund (ETF) portfolios. Our pure index strategies provide opportunistic tactical investing by identifying asset classes where relative over- and under-valuation exist, with tactical sector investments that are expected to outperform over longer periods of time. Our active approach to risk management is based on a quantitative process that cont...
Have a question about finance?
- Should I sell my stocks and put the money into mutual funds?
- Should I invest in mutual funds?
- Should I sell a non-performing Mutual Fund?
- I'm looking for an investment that I can just deposit money in and have it managed by a professional. Since my 401 (k) is through...
- Why do Financial Planners always ask to choose Mutual Funds , ETF or mixed funds etc rather than stocks?
Information is provided 'as is' and solely for informational purposes, not for investment purposes or advice. NerdWallet is not endorsed by or affiliated with FINRA. The helpfulness of an advisor's answer is not indicative of future advisor performance. NerdWallet does not endorse any particular financial advisor and cannot guarantee the quality, or reliability of any financial services provided by any of these financial advisors on the Ask An Advisor platform. Any financial information provided by an advisor and related to the provision of healthcare service is intended to promote broad consumer understanding and knowledge of third-party coverage for those services, and is not professional medical advice, diagnosis or treatment advice. Always seek the advice of your physician or other qualified healthcare provider with any questions you may have regarding a medical condition or treatment. NerdWallet does not recommend or endorse any specific physicians, products, procedures, tests, and reliance on any financial information related to healthcare coverage for products, procedures, and tests is solely at your own risk.
Disclaimer: NerdWallet strives to keep its information accurate and up to date. This information may be different than what you see when you visit a financial institution, service provider or specific product’s site. All financial products, shopping products and services are presented without warranty. Additionally, this site may be compensated through third party advertisers. However, the results of our financial services tools, blog content and reviews are based on objective analysis. For more information, please see our Advertiser Disclosure.