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Mutual Fund vs Exchange Traded Fund

Difference between Mutual Fund and Exchange Traded Fund

Basis of DifferenceMutual Fund (MF) Exchange Traded Fund (ETF)
ObjectiveTo earn relatively higher returns than
benchmark
Vs
To replicate the performance of the
index the ETF tracks
MeaningA 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
DiversificationInvests in diversified assets
Vs
Invests based on a particular index
ManagementActive management
Vs
Passive management
Unit priceNet Asset Value (NAV)
Vs
Quoted price
Fractional unitFractional units can be issued to the
investor
Vs
Can not issue fractional units to the
investor
Expense RatioHigher
Vs
Lower
BrokerageNo, if transacted directly
Vs
Yes
TransactionFrom mutual fund house
Vs
From stock exchange
Demat AccountNot required
Vs
Mandatory
TransparencyPortfolio and performance are disclosed
on quarterly basis
Vs
Portfolio and performance are disclosed
on daily basis