Question

Please select from the options in parentheses and explain the answers if you can. Thank you!

Compared to mutual funds, ETFs tend to have a (narrow or broad?) focus, (better or worse?) tax management, and (higher or lower?) overhead expenses.

Answer 1

Exchange traded funds tend to have a narrower focus than mutual funds. This is because exchange traded funds are based on a particular index but Mutual funds are not limited to index. their invest into many different sectors and stocks so Mutual funds are more wider investment than exchange traded funds.

exchange traded fund tends to have a better tax management than mutual funds because exchange traded fund are passively managed and focused into more on Cost cutting than capital appreciation.

exchange traded funds are having lower overhead expenses than mutual funds because exchange traded funds are passive funds while Mutual funds are active funds mostly, so they charge higher while exchange traded funds charge low overhead expenses