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How does an investor choose between an ETF and an index mutual fund tracking the same...

How does an investor choose between an ETF and an index mutual fund tracking the same underlying asset?

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Answer #1

Both are passive in investments. ETFs have higher trading cost than Indexed mutual funds. In case of ETFs trade happens according to Net Asset Value (NAV) and not the price. In case of mutual funds it may be open ended or close ended. In open ended you can invest or withdraw anytime. In close ended you cannot invest after its closed. You can trade ETFs and not indexed mutual funds. Hence a trader can buy ETF and sell it after it being a positive position. In case of mutual funds you cannot.

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