Which Is Better: An ETF Or A Mutual Fund?

The older mutual fund system works in an entirely different way. The buys and sells of fund shares take place once a day and are handled by the operator of the fund. If a no-load fund’s portfolio is worth $50.05 per fund share at the end of the trading day, all the buys and sells take place at that price.Not all market makers in the shares of an ETF are the same. Some, called “authorized participants,” do more than just quote bid and ask prices.

If more investors want out than in, the process works in reverse. The authorized participant buys unwanted ETF shares for cash. It hands in a big block of ETF shares, gets in return stock in Apple, Amazon and the rest, and then sells those positions. Proceeds from the 500 sell transactions repay the middleman for cash laid out in acquiring the unwanted shares.

One is that an ETF rarely has to sell positions for cash; instead, it’s mostly just swapping stock in Amazon and Apple and so on for fund shares. The other is that for this swap the ETF can select its lowest-cost lots of Amazon and Apple. With this maneuver, the fund is left with high-cost shares on its books. If it does do any selling for cash, for example to realign the portfolio, it will probably end up with few gains, or even a net capital loss at the end of the year.

Some ETFs are actively managed. These account for only a sliver of the industry’s assets, but they are becoming more common.

ETF provides better flexibility

United States Latest News, United States Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

Camila Cabello, Lady Gaga, Leonardo DiCaprio and More Call on Entertainment Execs to Demand Congress Pass Climate Change LegislationMore than 60 musicians, actors and artists partnered with the NRDC Action Fund to send a letter supporting the passing of President Joe Biden’s Build Back Better agenda. So what ? Cinderellaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa.....
Source: THR - 🏆 411. / 53 Read more »

New York to guarantee delivery workers access to bathrooms, transparent tipping policiesNew legislation will provide better working conditions and better pay for those working in app-based food delivery. So they can keep stealing people’s food?
Source: Newsweek - 🏆 468. / 52 Read more »

A's Star Chris Bassitt Returns To Mound 1 Month After Breaking FaceChris Bassitt returned to the mound just a few weeks after a comebacker broke his face -- and he dominated.
Source: TMZ - 🏆 379. / 59 Read more »

House Passes $1 Billion For Israel’s “Iron Dome” After Tense Feud Between DemocratsA handful of progressives and one Republican voted against the funds after they were stripped from a temporary government funding bill. …are right Good for them So these guys pass bills for other countries but not for the American people
Source: Forbes - 🏆 394. / 53 Read more »

Why Are There So Many Democrats to Joe Biden’s Right?Political necessity doesn’t explain moderate opposition to the $3.5 trillion Build Back Better Act. So what does? EricLevitz writes EricLevitz $$$$$$
Source: NYMag - 🏆 111. / 63 Read more »

The 5 Fanciest Wine Glasses You Haven’t Heard OfFor a well-designed glass that promises to make wine taste better, look to these brands
Source: Eater - 🏆 368. / 59 Read more »