Exchange-traded funds, also referred to as ETFs, are similar to mutual funds as both instruments bundle together securities to offer investors diversified portfolios. Yet, the two investment types have significant differences.
ETFs trade throughout the trading day, like a normal stock, while mutual funds trade only at the end of the day, at the net asset value (NAV) price.
Most ETFs track a particular index and therefore typically have lower operating expenses than actively invested Mutual Funds.
The Tax treatment of Mutual funds and ETFs may also differ. For more details, please refer to your personal tax advisor.