finance5 sections · 27 items
ETF vs Mutual Fund Cheat Sheet
Key differences between ETFs and mutual funds covering fees, tax efficiency, trading mechanics, and when to choose each investment vehicle.
Cost Comparison
| Item | Value |
|---|---|
| Average ETF expense ratio | 0.03% – 0.20% |
| Average mutual fund expense ratio | 0.50% – 1.50% |
| ETF trading commission | $0 at most brokers |
| Mutual fund load fees | 0% – 5.75% |
| 12b-1 fees (mutual funds) | 0.25% – 1.00% |
| Bid-ask spread (ETFs) | ~$0.01 for popular ETFs |
Trading & Liquidity
| Item | Value |
|---|---|
| ETF trading | Intraday (like stocks) |
| Mutual fund trading | End of day NAV only |
| ETF limit orders | Yes — full order types |
| Mutual fund orders | Market orders only |
| ETF minimum investment | 1 share (or fractional) |
| Mutual fund minimum | $1,000 – $3,000 typical |
Tax Efficiency
| Item | Value |
|---|---|
| ETF capital gains distributions | Rare |
| Mutual fund capital gains | Common (annually) |
| Tax-loss harvesting | Easier with ETFs |
| Turnover ratio | Lower for index ETFs |
| Wash sale considerations | Watch similar ETFs |
Key Features Comparison
| Item | Value |
|---|---|
| Transparency | ETFs: daily holdings |
| Automatic investing | Mutual funds easier |
| Dividend reinvestment | Both offer DRIP |
| Active management | Both available |
| Index tracking | Both available |
When to Choose Each
| Item | Value |
|---|---|
| Choose ETFs if | Tax-sensitive, cost-conscious |
| Choose mutual funds if | Auto-investing, 401(k) |
| Taxable accounts | ETFs generally better |
| 401(k) / 403(b) | Mutual funds (usually only option) |
| IRA accounts | Either works well |
Tip: Use landscape orientation for wider tables
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