Mutual Funds and ETFs Explained – Structure, Types, and Transacting

This video covers the following learning objectives:

Describe how mutual funds and ETFs are structured

• Defined both as pooled investment vehicles.

• Explained differences in:

  • Pricing (daily NAV for mutual funds vs. intra-day pricing for ETFs)

  • Management styles (active vs. passive)

  • Trading mechanisms (redemption for mutual funds vs. exchange-traded for ETFs)

• Introduced key concepts like authorized participants and fund managers.

Explain the different types of mutual funds and ETFs

• Categorized mutual funds into:

  • Equity Funds

  • Bond Funds

  • Balanced Funds

  • Money Market Funds

  • Target-Date Funds

• Categorized ETFs into:

  • Index ETFs

  • Sector ETFs

  • Bond ETFs

  • Dividend ETFs

  • Thematic/ESG ETFs

• Clarified which types are suited for different investor goals.

Discuss how mutual funds and ETFs are bought and sold

• Compared buy/sell processes:

  • Mutual funds: Purchased through banks/advisors; priced at NAV once daily.

  • ETFs: Bought on exchanges via brokerage platforms; priced in real time.

• Highlighted common fee structures:

  • MERs, sales charges (for mutual funds), brokerage commissions (for ETFs)

• Explained different transaction types (e.g., lump sum, PAC, market orders).