What are the differences between mutual funds and ETFs?

What are the differences between mutual funds and ETFs?

Mutual funds and ETFs are both investment vehicles, but they differ in structure, trading, and fees. Would you like to know more about a specific aspect?

Yes, how do their fees compare?

Generally, ETFs tend to have lower expense ratios compared to mutual funds. However, mutual funds may have additional fees like load fees. Are you interested in learning about specific funds?

What about their tax implications?

ETFs are usually more tax-efficient due to their structure, which allows investors to avoid capital gains distributions. Mutual funds, on the other hand, may distribute capital gains to shareholders. Would you like to explore this further?

Yes, please explain how capital gains work in both.

In mutual funds, when the fund manager sells securities at a profit, those gains are passed on to investors, potentially leading to tax liabilities. ETFs, however, allow investors to control when they sell, often avoiding immediate tax consequences. Would you like to know more about investment strategies?