Exchange Traded Funds vs. Mutual Funds

Some of the key differences between these two types of investment vehicles include:

• How they are traded: ETFs are traded on stock exchanges, like individual stocks, and can be bought and sold throughout the day. In contrast, mutual funds are not traded on exchanges and can only be bought or sold at the end of the trading day. Because ETFs are traded on an exchange, they can be bought and sold at any brokerage. Some Mutual Funds on the other hand may not be available at all brokerages.
• How they are managed: Mutual funds are more often actively managed by a fund manager, who selects the underlying securities and makes decisions about buying and selling them. ETFs, on the other hand, are more likely to be passively managed and typically track the performance of a specific market index, such as the S&P 500. However, a large part of mutual funds are passive and a growing share of ETFs are actively managed. 
•  Fees:  Historically, mutual funds often had higher fees because they are more likely to be actively managed, while ETFs typically had lower fees because they are more often passively managed. However, this changing as more ETFs are actively managed and a larger share of mutual funds are passive index funds.
• Diversification: Both ETFs and mutual funds provide diversification benefits.
• Taxation: Because of the way ETFs are created and redeemed they may generate a lower amount of capita gains.

In general, the choice between an ETF and a mutual fund will depend on an individual investor's goals, risk tolerance, and investment horizon. Both types of funds have their own advantages and disadvantages, and it is important to carefully consider these factors before making a decision. Further the market dynamics between mutual funds and ETFs are changing rapidly and it's best to consult your financial advisor for the latest state of play.