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    • athairmor@lemmy.worldEnglish
      63·
      3 days ago

      Probably, good… for investors. It’s better to invest in ETFs over mutual funds for many/most people. A mutual fund is an investment vehicle in which a manager aggregates a bunch of stocks and sells share in the group of stocks. This limits the risk and ensures more gains but the manager needs to be paid. An ETF is like a mutual fund without a manager, the choice of stocks is done automatically by computer software and tries to track the market (or market segment) as a whole. So, less money is lost to paying fund managers and the software is pretty smart.

      History has shown a that, on average, automatically managed funds outperform funds managed by people.

      There are a lot of people out there who think they are smarter than the market, including fund managers. They are not. If you have money to invest, like in a IRA or 401k, you should put it in ETFs.

      • wasabiEnglish
        9·
        3 days ago

        I believe you are confusing ETF with active vs passive investing. Passive (index) mutual funds can have a corresponding ETF, same with actively managed funds/ETF. The main difference is that ETF can be traded throughout the day while mutual funds settle once per day, at least at places like Vanguard and Schwab. Also, mutual funds allow fractional purchases while ETFs do not. Generally, mutual funds are better than ETFs if you are a long term investor type where you don’t care about ups and downs throughout the day and not going to trade during the day. I’d also say that mutual fund fees are usually cheaper than corresponding ETF. It doesn’t matter that much though if you pick mutual fund or its ETF - they represent the same securities just wrapped in a different package.