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Mutual Funds |
ETFs |
| Pricing |
Shares are priced at the end of the trading day.
All orders placed before the market close receive
that day’s price.
Mutual fund share price is called its
“net asset value” or NAV |
Prices fluctuate throughout the trading day |
| Trading costs-online trades |
No transaction fee fund: we offer over 70 no-load
mutual funds with no transaction fees.
Other no-load mutual funds can be purchased online
for $19.95 per trade |
Online ETF trades are $9.95 Advantage Program subscribers pay $7.95 for ETF trades |
| Sales charges (“loads”) |
Can be offered with or with out sales charges.
We only offer no-load mutual funds |
No additional sales charges or “loads” |
| Buying and selling shares |
Orders must be entered before the market close
(4pm Eastern time) to receive that day’s price |
Orders are filled throughout the trading day at
the current market price |
| Management |
Can be actively or passively (tied to an index) managed |
ETFs are generally indexed, or passively managed |
| Minimum investment amount |
Each mutual fund can set its own minimum initial investment amount. The minimum investment requirement is in each fund’s prospectus.
If purchasing in an Automatic Investment Plan, some funds require the minimum investment amount
be met before automatic investments for
smaller amounts can be set up |
For online trades, the minimum investment is the amount to purchase one share plus trading costs.
If purchasing in an Automatic Investment Plan,
there is no minimum purchase amount |
| Dividends and capital gains |
Paid out on a schedule-generally monthly, quarterly or annually. Investors can take distributions in cash or reinvest them into additional shares |
Dividends can be paid out or reinvested into
more shares of the tracking index.
If an investor wishes to reinvest dividends, the ETF
must be eligible for a dividend reinvestment program.
Due to the passive nature of ETFs, capital gains are
usually not realized unless there is a change in
the ETF’s tracking index |
| Tax implications |
Depends on the investment objective of the mutual fund. Some mutual funds seek tax-free interest (municipal bond funds); some are managed to be tax-efficient.
Depending on a fund’s portfolio turnover, realized long and short-term capital gains are passed along to shareholders |
Depends on the sector or index the ETF invests in; e.g. municipal bond ETFs may generate tax-free income.
Generally, because ETFs track an index, they do not realize as many gains and losses, and so less is passed on to ETF shareholders |
| Expenses |
Varies based on fund company and investment objective. Large index funds can have very low expense ratios. Smaller, more actively managed funds or those that invest in some sectors can have higher expenses |
Because most ETFs track an index, expenses are generally lower than actively managed securities |
