Hi everyone, I am having some confusion between ETFs and Traditional Mutual funds. ETFs trades like closed-end funds (which is not traditional) However they are indeed open-end funds which is like a traditional fund. Open end funds are subject to capital gains tax. ETFs are not subject to capital gains tax with its ‘in-kind’ redemption characteristic. All in all, what IS the main difference between these two funds? It seems as if they are inter-related? I would greatly appreciate any input. THANK YOU!
why do etfs “trade like closed-end funds”? they are *exchange traded*, which is their main characteristic.
closed end fund are traded continuously on the secondary market ? so are ETFs ?
ETFS trade because a NAV is not struck each day like an open ended mutual fund which determies price people subscribe and redeem out of their price is determined by supply and demand in the market place and MAY trade a premium or discount of their NAV (more like an equity)
Hi, I guess there are closed end funds which do not trade on exchanges? (Correct me if I’m wrong. We have stuff like closed end funds which invest in life insurance policies which do not trade an an exchange in Germany.) I guess the defining feature of a closed end fund is that it is not open to new investments, right?
closed end fund - supply of shares is fixed…thereofre price is dependant on supply & demand - NAV can therefore be at premium or discount open-end funds - new issues of shares possible - value should be close to NAV? i think getting confused between "exchange traded’ and ‘continuos trading on 2ndary market’
> "exchange traded’ and ‘continuos trading on 2ndary market’ That’s probably thye same in this context.