Mutual Funds and Exchange Traded Funds? Which one is better and why?

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They are two different products , with some similarities . ETFs could be cheaper.

MF = Mutual Funds

ETF = Exchange traded funds

ETF’s can be bought and sold like any other scrips on the exchanges. There is no load (charges)

MF’s can’t be bought or sold like ETF’s on exchanges, in other words they are not listed on exchanges. You have to buy/sell from mutual fund companies and there is a load charged on every buy/sell.

I personally feel, ETF’s are better.

  1. In Mutual Funds money of many investors are pooled and invested by a fund manager.Therefore due to active trading by fund manager, mutual fund are costly.

    In ETF all the constituents of the benchmark index are bought before listing of ETF. So an ETF has same stocks and in same weightage as that of an index. And by a creation/redemption process a particular index is tracked.This process is less costly.

  2. But the tradeoff is while an ETF is designed to provide same returns as of an index, mutual fund can provide better returns than an ETF and vice-versa because mutual fund manager can buy shares in his own way.

  3. ETF can be traded whole day but mutual fund can be traded only at the end of the day.

So, I think ETF are better because most of the mutual funds perform poorer than the benchmark index. And ETF are also less costly and you can trade them whole day.

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Exchange-traded funds are similar to the mutual funds because both instruments package together securities to recommend investors expand portfolios. Mutual Funds have been a well-liked way to invest for numerous decades even as Exchange Traded Funds. So, ICICI Pru MF is better.