Common CentsInvestment GroupMutual Funds & Exchange Traded Funds

Tuesday October 8th

Mutual FundsPopular way to diversify account

◦Each stock selected specificallyGoal is to beat the market

◦80% do not beat the marketHigher expense ratiosMinimum investments

◦$500 - $2,000,000

Exchange Traded Funds - ETFBought and sold during market

hours◦Place like stock – stop, limit orders

Stocks within fund passively managed

Great for diversification◦Track index◦Track industry or sectors◦Commodities◦Emerging market countries

ETF Growth

Courtesy of schwab.connectsolutions.com

Overall ComparisonExchange Traded Funds Mutual Funds

Traded during market hoursAll equities in index/industry

selected (passive)Holdings updated dailyLower expense ratiosGenerally lower

commissions◦ Good for buying ‘frequently’

Less actively managed

Usually no minimum investment

Traded after market close

Equities specifically chosen (active)

Holdings updated quarterly

Higher expense ratiosSometimes higher

commissions◦ Better for buying

‘infrequently’

More actively managed◦ Short term tries to beat

market

Minimum investments

Example ETF’s

IBB - continued

Example Mutual Fund

VICEX - continued