InsiderFlow › Comparisons › ETFs vs mutual funds

ETFs vs mutual funds

Same principle — a diversified basket of securities — but two different worlds for costs, transparency and results. The comparison every saver should see before signing.

Criterion	ETFs	Mutual funds
Annual costs	0.05–0.4% (passive)	Typically 1–2.5%, plus possible entry/exit/performance fees
Management	Almost always passive: tracks an index	Almost always active: a manager picks securities
Historical results	The index's return, minus minimal costs	The majority underperform their benchmark over 10–15 years (SPIVA data)
Transparency	Holdings published daily	Holdings published with delay, every 6–12 months
Trading	On exchange in real time, like a stock	Subscription/redemption at NAV, days of settlement
Where to buy	Any broker	Often through banks or advisor networks

The verdict

The numbers speak: over long horizons the vast majority of active funds return less than an equivalent ETF, mainly due to costs. A mutual fund can make sense in niches where active management proves its worth, or when it includes advisory service you actually use. Otherwise, the cost difference — compounded over decades — is worth tens of thousands.

Frequently asked questions

Why does my bank offer funds instead of ETFs?

Incentives: funds share fees with distributors, ETFs don't. Not a conspiracy, just the business model: knowing it helps you decide.

Do actively managed ETFs exist?

Yes, and growing (like ARK's in the US): ETF-style transparency and intermediate costs, but with active management's same uncertainties.