With ETF’s there isn’t the huge management fee. They trade like stocks. They outperform the mutual funds with the same investment objectives 90% of the time over 5 year periods. You can put stop losses and buy limits on them. You don’t pay penalties for early withdrawals. You know its value at all times.
Do you have a compelling reason to buy a mutual fund instead?
So Fresh has a good point with tax consequences but if it is in an IRA it doesn’t matter. Additionally, mutual funds distribute capital gains without any input or control of the holder. Also, even no load funds hide their fees in their daily NAV.
Home | Investing | Blog article: Is there still a reason why someone would want to invest in mutual funds rather than ETFs?
Marla 7:57 pm on March 9, 2010
Mutual funds are safer. ETFs are high risk. No one buys and sells the stocks in the ETF. When a stock goes bad, the ETF will keep it and go down with the ship.
Big Bully 7:58 pm on March 9, 2010
Nope, you pretty much said it all.
Ashley! 7:58 pm on March 9, 2010
It’s really just for people who are to uninformed and would rather have the "security" of a "professional manager". Mostly for people who don’t want to know anything about investing.
$so fresh so clean$ (3 for 3) 7:58 pm on March 9, 2010
Since they trade like stocks, you’re going to get eaten up in short term gains if not held for more than a year.
If you find the right company, mutual funds are relatively low in cost, especially no load funds.
exactduke 7:58 pm on March 9, 2010
The biggest drawback to ETFs, is transaction costs, every time you buy or sell. So they are ok, for a lump sum investment. But they are a terrible choice for dollar-cost-averaging.
Randika A 7:58 pm on March 9, 2010
Answer is simple as u say "With ETF’s there isn’t the huge management fee" then with risk & return mutual funds are the best,
if you want to know about investments,share markets & mutual funds as a theoretically points,