Mutual Fund vs Exchange Traded Fund
Difference between Mutual Fund and Exchange Traded Fund
Basis of Difference | Mutual Fund (MF) | Exchange Traded Fund (ETF) | |
---|---|---|---|
Objective | To earn relatively higher returns than benchmark | Vs | To replicate the performance of the index the ETF tracks |
Meaning | A trust which pools the savings of several investors together and invest this collected fund in diversified basket of securities at low cost | Vs | An investment scheme which tracks a particular index. It is compulsory to list the ETF and it can be traded on a stock exchange on which it is listed |
Diversification | Invests in diversified assets | Vs | Invests based on a particular index |
Management | Active management | Vs | Passive management |
Unit price | Net Asset Value (NAV) | Vs | Quoted price |
Fractional unit | Fractional units can be issued to the investor | Vs | Can not issue fractional units to the investor |
Expense Ratio | Higher | Vs | Lower |
Brokerage | No, if transacted directly | Vs | Yes |
Transaction | From mutual fund house | Vs | From stock exchange |
Demat Account | Not required | Vs | Mandatory |
Transparency | Portfolio and performance are disclosed on quarterly basis | Vs | Portfolio and performance are disclosed on daily basis |