Funds & ETFs
ETF vs mutual fund: what is the difference?
They can hold the very same investments. The differences are in how you buy them, when the price is set, which fees apply and how often they pass taxable gains to you.
Funds & ETFs
Most people who invest for the long term end up owning funds rather than picking individual stocks or bonds. A fund pools money from many investors into one portfolio, run under written rules and registered with the U.S. Securities and Exchange Commission.
Also in Funds & ETFs
Funds & ETFs
Index funds explained
Funds & ETFs
How to read a fund prospectus
New to Funds & ETFs? Read in this order
- What is a mutual fund?
7 min read
- What is an ETF?
6 min read
- Expense ratios and fund fees explained
6 min read
All Funds & ETFs explainers
6 published
Funds & ETFs
What is a mutual fund?
One purchase can give you a slice of hundreds of stocks or bonds. Here is how a mutual fund is priced once a day, why the same fund comes in different share classes, and what a load is.
Funds & ETFs
What is an ETF?
An exchange-traded fund holds a basket of investments like a mutual fund but trades like a stock. Here is how shares come into existence, how you buy them, and the small costs that come with trading.
Funds & ETFs
Index funds explained
Instead of trying to pick winners, an index fund tries to copy a list. Here is how that list is built, why the fund never matches it perfectly, and what risks remain.
Funds & ETFs
Expense ratios and fund fees explained
A fund's fees are quoted in fractions of a percent, so they look tiny. Over decades they compound like returns do — just in the wrong direction. Here is every fee to look for and what it can cost.
Funds & ETFs
How to read a fund prospectus
The prospectus is the fund's official disclosure document. It looks long, but the summary section at the front follows the same order for every fund — once you know the order, you can read one in minutes.
Terms used in this section
Glossary A–ZAbout this section
Most people who invest for the long term end up owning funds rather than picking individual stocks or bonds. A fund pools money from many investors into one portfolio, run under written rules and registered with the U.S. Securities and Exchange Commission. The two wrappers you will meet most often are mutual funds, which you buy from the fund at a price set once a day, and exchange-traded funds (ETFs), which trade on a stock exchange throughout the day. Either can follow an index or be actively managed.
This section explains how each one works, step by step and from primary sources such as the SEC's Investor.gov and FINRA. You will learn what net asset value means, why the same fund can come in several share classes, how ETF shares are created, and how a fee of a fraction of a percent can grow into thousands of dollars over decades. We do not recommend or rank funds. The goal is that you can open any fund's prospectus, find the fee table and the risks, and understand what you are reading.