Whats the difference between ETFs and Closed-end Mutual Funds?
Major or minor differences. Can’t tell a difference right off except for varying diversity in allocation. I’m sure there is more than that though.–Any help? Houyhnhnm 7:26 am on August 26, 2010 There are major differences. Think of an ETF as an open-end (“normal”) mutual fund with a set portfolio and trading on a stock exchange instead of through a fund company. As with “normal” mutual funds, your net asset value (price per share) is determined totally by the value of the stocks and/or bonds in the fund. With an ETF you also have to worry about the spread charged by the market-makers, but basically if you have a Spyder it is going to move very closely with the S&P500. Closed-end funds have a set number of shares, just like a stock, and their price moves somewhat independently of the net asset value of the holdings. This can be a blessing or a curse, but it provides arbitrage potential and extra volatility in the long term. If you look in Barron’s or the Monday issue of the Wall Street
