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
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