Randy Eschels photo
Garett Eschels photo

 

Randy Eschels, CLU, ChFC, CFP®

 

Garett Eschels

 

 

Eschels Financial Group, Inc.

555 S Old Woodward Avenue, Suite 612

Birmingham, MI 48009

 

Phone:  248-644-1144

             800-969-9990

Fax:      248-644-7820

 

randy@eschelsfinancial.net

garett@eschelsfinancial.net

www.efg-ida.com

March/April 2022

Mutual Funds and ETFs: Alike but Different

Mutual Funds and ETFs Alike but Different

Mutual funds* and exchange-traded funds* (ETFs) are both baskets of individual securities that offer a variety of asset classes and niche markets that can help investors diversify** their portfolios. There are differences between them, however, that could make one option preferable for a particular investor.


Mutual Funds
Initial investments are usually a flat dollar amount, which may or may not be affordable for an investor. Also, mutual funds are either actively managed or pinned to an index. Earnings can be taxable and are paid as dividends, capital gains distributions, or increases in the share price. Mutual funds allow automatic investments and withdrawals. Share prices are calculated at the end of each trading day when all trades are executed. Not all funds have a sales fee but do charge other fees and expenses, which vary.


Exchange-Traded Funds
ETFs are traded on an exchange, like stocks, throughout the day, so investors can purchase as few as one individual share. Most ETFs follow an index, but some are actively managed. Passively managed ETFs may have lower expenses and can be tax efficient because trades are only made to match changes in their index. However, some trades can trigger the capital gains tax. Index funds can be less volatile than those that follow a specific sector. ETFs can be relatively inexpensive, however, investing in them does include certain costs, which may include: operating expense ratio (OER), trading costs, commissions (if applicable), bid/ask spreads, and changes in discounts and premiums to an ETF’s net asset value.


Your financial professional can review costs and help you decide whether mutual funds or ETFs will fit into your investment plan.


*Investors should carefully consider the investment objectives, risks, charges, and expenses of the fund before investing. Contact the issuing firm to obtain a prospectus, which should be read carefully before investing or sending money. Because mutual fund values fluctuate, redeemed shares may be worth more or less than their original value. Past performance won’t guarantee future results. An investment in mutual funds may result in the loss of principal.
** Diversification cannot eliminate the risk of investment losses. Past performance won’t guarantee future results. An investment in stocks or mutual funds can result in a loss of principal.


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Securities offered through Concourse Financial Group Securities, Inc. (CFGS), Member FINRA/SIPC. Advisory services offered through Concourse Financial Group Advisors, a DBA for CFGS, a Registered Investment Advisor. Eschels Financial Group, Inc. is independent of CFGS.
Eschels Financial Group, Inc. and LTM Marketing Specialists LLC are unrelated companies. This publication was prepared for the publication’s provider by LTM Client Marketing, an unrelated third party. Articles are not written or produced by the named representative.

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