{"id":29722,"date":"2022-09-16T11:22:58","date_gmt":"2022-09-16T11:22:58","guid":{"rendered":"https:\/\/www.tatacapital.com\/blog\/?p=29722"},"modified":"2025-10-13T11:58:57","modified_gmt":"2025-10-13T11:58:57","slug":"etf-vs-mutual-funds","status":"publish","type":"post","link":"https:\/\/www.tatacapitalmoneyfy.com\/blog\/debt-funds\/etf-vs-mutual-funds\/","title":{"rendered":"What are ETFs and mutual funds?"},"content":{"rendered":"\n<p><\/p>\n\n\n\n<p>Exchange-Traded Funds (ETFs) and mutual funds are two popular investment instruments that allow you to diversify your portfolio. While both pool money from multiple investors, they differ in structure, costs, and flexibility. Understanding the differences between mutual funds and ETFs can help you choose the right option based on your goals, risk appetite, and investment style.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Key Differences Between ETFs and Mutual Funds<\/strong><\/h2>\n\n\n\n<p>The following table explains what is the difference between ETFs and mutual funds.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>S.No.<\/strong><\/td><td><strong>Factors<\/strong><\/td><td><strong>Mutual Funds<\/strong><\/td><td><strong>ETFs<\/strong><\/td><\/tr><tr><td><strong>1<\/strong><\/td><td><strong>Buying and selling<\/strong><\/td><td>Mutual fund units are bought at a fixed NAV price during the trading day and sold at the closing asset value<\/td><td>ETF units are traded on the stock exchange throughout the day, with NAV changing constantly. They can be bought or sold at the market price anytime<\/td><\/tr><tr><td><strong>2<\/strong><\/td><td><strong>Fund management charges<\/strong><\/td><td>High expense ratio<\/td><td>Low expense ratio and more returns.<\/td><\/tr><tr><td><strong>3<\/strong><\/td><td><strong>Minimum investment<\/strong><\/td><td>Most require Rs. 100 or Rs. 500<\/td><td>No minimum investment required<\/td><\/tr><tr><td><strong>4<\/strong><\/td><td><strong>Liquidity<\/strong><\/td><td>Mutual funds are traded only once daily, based on the Net Asset Value (NAV) calculated at the end of the trading day<\/td><td>ETFs trade like stocks throughout the day, offering higher liquidity<\/td><\/tr><tr><td><strong>5<\/strong><\/td><td><strong>Investment Approach<\/strong><\/td><td>Actively managed based on analysis and market outlook by fund managers<\/td><td>Passively managed as they track a particular index<\/td><\/tr><tr><td><strong>6<\/strong><\/td><td><strong>Taxation<\/strong><\/td><td>Less tax-efficient<\/td><td>More tax-efficient with less capital gains tax<\/td><\/tr><tr><td><strong>7<\/strong><\/td><td><strong>Diversification<\/strong><\/td><td>ETFs track a specific index or sector, offering more targeted investments<\/td><td>Mutual funds provide broader diversification across asset classes.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>ETF vs. Mutual Fund<\/strong><\/h2>\n\n\n\n<p>While ETFs and mutual funds are similar in several ways, understanding the differences between exchange-traded funds vs. mutual funds is key to making informed decisions.<\/p>\n\n\n\n<ol type=\"1\" start=\"1\">\n<li>The first significant difference lies in the way they are traded. ETFs are traded like shares on stock exchanges throughout the day, whereas mutual funds are bought or redeemed directly with the fund house at the end-of-day NAV.<\/li>\n\n\n\n<li>The second ETF versus mutual fund difference lies in their costs. ETFs typically have lower expense ratio and no fund management charges, while mutual funds may have higher expense ratios and management fees.<\/li>\n\n\n\n<li>Both offer diversification by pooling money across many securities. However, mutual funds can be actively managed, allowing for broader diversification into debt, equity, and hybrid options, while ETFs usually track a specific index or sector.<\/li>\n\n\n\n<li>Liquidity is another factor of differentiation. ETFs offer intraday liquidity since they trade like stocks, whereas mutual funds can only be bought or sold once daily.<\/li>\n\n\n\n<li>The minimum investment for the two options also varies greatly. ETFs require you to buy at least one unit, whereas mutual funds may have higher minimum lump sum or SIP amounts.<\/li>\n\n\n\n<li>Another difference between ETFs vs. mutual funds is the taxation of gains. If you redeem mutual funds in less than one year, the taxation rates on gains are higher than those of ETFs held for less than a year.<\/li>\n\n\n\n<li>The exit load must also be considered as a point of differentiation between ETFs and mutual funds. Mutual funds may levy exit loads, but ETFs usually don\u2019t. They may incur brokerage charges.<\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Similarities Between ETFs and Mutual Funds<\/strong><\/h2>\n\n\n\n<p>Now that you have the answers to what are ETFs and mutual funds, here are the similarities between them:<\/p>\n\n\n\n<ol type=\"1\" start=\"1\">\n<li>Both mutual funds and exchange-traded funds pool together several investors\u2019 money.<\/li>\n\n\n\n<li>Both funds are managed by professional fund managers working with fund houses.<\/li>\n\n\n\n<li>Fund managers invest the collected money in a variety of asset types like bonds, stocks, commodities, securities, or a combination of these.<\/li>\n\n\n\n<li>Both can be active funds or passive funds.<\/li>\n<\/ol>\n\n\n\n<p><\/p>\n\n\n\n<div class=\"wp-block-buttons is-horizontal is-content-justification-center is-layout-flex wp-container-1 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/www.tatacapitalmoneyfy.com\">Visit Moneyfy Website For More Details<\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><\/h2>\n","protected":false},"excerpt":{"rendered":"<p>Exchange-Traded Funds (ETFs) and mutual funds are two popular investment instruments that allow you to diversify your portfolio. While both pool money from multiple investors, they differ in structure, costs, and flexibility. Understanding the differences between mutual funds and ETFs can help you choose the right option based on your goals, risk appetite, and investment [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":29723,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[71],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>ETFs vs Mutual Funds: Similarities and Differences Between ETFs and Mutual Funds | Tata Moneyfy<\/title>\n<meta name=\"description\" content=\"Mutual funds vs ETFs - ETFs trade like stocks, while mutual funds are actively managed. Find the difference between ETFs and Mutual funds.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"ETFs vs Mutual Funds: Similarities and Differences Between ETFs and Mutual Funds | Tata Moneyfy\" \/>\n<meta property=\"og:description\" content=\"Mutual funds vs ETFs - ETFs trade like stocks, while mutual funds are actively managed. Find the difference between ETFs and Mutual funds.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.tatacapitalmoneyfy.com\/blog\/debt-funds\/etf-vs-mutual-funds\/\" \/>\n<meta property=\"og:site_name\" content=\"Moneyfy Blog\" \/>\n<meta property=\"article:published_time\" content=\"2022-09-16T11:22:58+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-10-13T11:58:57+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.tatacapitalmoneyfy.com\/blog\/wp-content\/uploads\/2022\/09\/etf-vs-mutual-funds.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"770\" \/>\n\t<meta property=\"og:image:height\" content=\"400\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"admin\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"admin\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.tatacapitalmoneyfy.com\/blog\/debt-funds\/etf-vs-mutual-funds\/\",\"url\":\"https:\/\/www.tatacapitalmoneyfy.com\/blog\/debt-funds\/etf-vs-mutual-funds\/\",\"name\":\"ETFs vs Mutual Funds: Similarities and Differences Between ETFs and Mutual Funds | Tata Moneyfy\",\"isPartOf\":{\"@id\":\"https:\/\/www.tatacapital.com\/blog\/#website\"},\"datePublished\":\"2022-09-16T11:22:58+00:00\",\"dateModified\":\"2025-10-13T11:58:57+00:00\",\"author\":{\"@id\":\"https:\/\/www.tatacapital.com\/blog\/#\/schema\/person\/d82891f59a900962b0e93fee2be1099b\"},\"description\":\"Mutual funds vs ETFs - ETFs trade like stocks, while mutual funds are actively managed. Find the difference between ETFs and Mutual funds.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.tatacapitalmoneyfy.com\/blog\/debt-funds\/etf-vs-mutual-funds\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.tatacapitalmoneyfy.com\/blog\/debt-funds\/etf-vs-mutual-funds\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.tatacapitalmoneyfy.com\/blog\/debt-funds\/etf-vs-mutual-funds\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.tatacapitalmoneyfy.com\/blog\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"What are ETFs and mutual funds?\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.tatacapital.com\/blog\/#website\",\"url\":\"https:\/\/www.tatacapital.com\/blog\/\",\"name\":\"Moneyfy Blog\",\"description\":\"\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.tatacapital.com\/blog\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.tatacapital.com\/blog\/#\/schema\/person\/d82891f59a900962b0e93fee2be1099b\",\"name\":\"admin\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.tatacapital.com\/blog\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/0e9e78de7f84add076f397dd13acc708?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/0e9e78de7f84add076f397dd13acc708?s=96&d=mm&r=g\",\"caption\":\"admin\"},\"sameAs\":[\"https:\/\/www.tatacapitalmoneyfy.com\/blog\"],\"url\":\"https:\/\/www.tatacapitalmoneyfy.com\/blog\/author\/admin\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"ETFs vs Mutual Funds: Similarities and Differences Between ETFs and Mutual Funds | Tata Moneyfy","description":"Mutual funds vs ETFs - ETFs trade like stocks, while mutual funds are actively managed. Find the difference between ETFs and Mutual funds.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"og_locale":"en_US","og_type":"article","og_title":"ETFs vs Mutual Funds: Similarities and Differences Between ETFs and Mutual Funds | Tata Moneyfy","og_description":"Mutual funds vs ETFs - ETFs trade like stocks, while mutual funds are actively managed. Find the difference between ETFs and Mutual funds.","og_url":"https:\/\/www.tatacapitalmoneyfy.com\/blog\/debt-funds\/etf-vs-mutual-funds\/","og_site_name":"Moneyfy Blog","article_published_time":"2022-09-16T11:22:58+00:00","article_modified_time":"2025-10-13T11:58:57+00:00","og_image":[{"width":770,"height":400,"url":"https:\/\/www.tatacapitalmoneyfy.com\/blog\/wp-content\/uploads\/2022\/09\/etf-vs-mutual-funds.jpg","type":"image\/jpeg"}],"author":"admin","twitter_card":"summary_large_image","twitter_misc":{"Written by":"admin","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.tatacapitalmoneyfy.com\/blog\/debt-funds\/etf-vs-mutual-funds\/","url":"https:\/\/www.tatacapitalmoneyfy.com\/blog\/debt-funds\/etf-vs-mutual-funds\/","name":"ETFs vs Mutual Funds: Similarities and Differences Between ETFs and Mutual Funds | Tata Moneyfy","isPartOf":{"@id":"https:\/\/www.tatacapital.com\/blog\/#website"},"datePublished":"2022-09-16T11:22:58+00:00","dateModified":"2025-10-13T11:58:57+00:00","author":{"@id":"https:\/\/www.tatacapital.com\/blog\/#\/schema\/person\/d82891f59a900962b0e93fee2be1099b"},"description":"Mutual funds vs ETFs - ETFs trade like stocks, while mutual funds are actively managed. Find the difference between ETFs and Mutual funds.","breadcrumb":{"@id":"https:\/\/www.tatacapitalmoneyfy.com\/blog\/debt-funds\/etf-vs-mutual-funds\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.tatacapitalmoneyfy.com\/blog\/debt-funds\/etf-vs-mutual-funds\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.tatacapitalmoneyfy.com\/blog\/debt-funds\/etf-vs-mutual-funds\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.tatacapitalmoneyfy.com\/blog\/"},{"@type":"ListItem","position":2,"name":"What are ETFs and mutual funds?"}]},{"@type":"WebSite","@id":"https:\/\/www.tatacapital.com\/blog\/#website","url":"https:\/\/www.tatacapital.com\/blog\/","name":"Moneyfy Blog","description":"","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.tatacapital.com\/blog\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.tatacapital.com\/blog\/#\/schema\/person\/d82891f59a900962b0e93fee2be1099b","name":"admin","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.tatacapital.com\/blog\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/0e9e78de7f84add076f397dd13acc708?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/0e9e78de7f84add076f397dd13acc708?s=96&d=mm&r=g","caption":"admin"},"sameAs":["https:\/\/www.tatacapitalmoneyfy.com\/blog"],"url":"https:\/\/www.tatacapitalmoneyfy.com\/blog\/author\/admin\/"}]}},"featured_image_url":"https:\/\/www.tatacapitalmoneyfy.com\/blog\/wp-content\/uploads\/2022\/09\/etf-vs-mutual-funds.jpg","_links":{"self":[{"href":"https:\/\/www.tatacapitalmoneyfy.com\/blog\/wp-json\/wp\/v2\/posts\/29722"}],"collection":[{"href":"https:\/\/www.tatacapitalmoneyfy.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.tatacapitalmoneyfy.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.tatacapitalmoneyfy.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.tatacapitalmoneyfy.com\/blog\/wp-json\/wp\/v2\/comments?post=29722"}],"version-history":[{"count":14,"href":"https:\/\/www.tatacapitalmoneyfy.com\/blog\/wp-json\/wp\/v2\/posts\/29722\/revisions"}],"predecessor-version":[{"id":38985,"href":"https:\/\/www.tatacapitalmoneyfy.com\/blog\/wp-json\/wp\/v2\/posts\/29722\/revisions\/38985"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.tatacapitalmoneyfy.com\/blog\/wp-json\/wp\/v2\/media\/29723"}],"wp:attachment":[{"href":"https:\/\/www.tatacapitalmoneyfy.com\/blog\/wp-json\/wp\/v2\/media?parent=29722"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.tatacapitalmoneyfy.com\/blog\/wp-json\/wp\/v2\/categories?post=29722"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.tatacapitalmoneyfy.com\/blog\/wp-json\/wp\/v2\/tags?post=29722"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}