How is an ETF different from a mutual fund?

An ETF (ExchangeTraded Fund) and a mutual fund are both types of investment funds, but they differ in the way they are structured, bought, and sold.

One of the main differences between the two is how they are traded. Mutual funds are priced once a day after the markets close, based on the net asset value (NAV) of the underlying assets, and are bought and sold through the fund company at that day's NAV price. In contrast, ETFs are traded on an exchange like stocks throughout the trading day, and their price fluctuates based on supply and demand.

Another difference is in the way they are managed. Mutual funds are actively managed by a fund manager who makes decisions on which securities to buy and sell. ETFs, on the other hand, are generally passively managed and designed to track a particular index, with a goal of matching its performance as closely as possible.

ETFs also tend to have lower expense ratios than mutual funds, since they are typically passively managed and have lower trading costs. However, ETFs may be subject to brokerage commissions and other trading fees, which mutual funds may not have.

Ultimately, the choice between an ETF and a mutual fund will depend on an individual's investment objectives, risk tolerance, and trading preferences.