ETFs trade mid-day instead of just end of day. You can only buy unit shares (but the unit price is typically far lower than mutual fund minimums). Those are really the only differences I know about.
ETFs only trade interday; mutual funds only trade end of day. It can be more convenient to automatically invest some portion of your pay in a mutual fund than an ETF. (Also, Vanguard mutual funds are shares classes of their ETFs, so they have the same tax benefit ETFs do here.)
Not necessarily, maybe there's a strategy that returns 1 extra percent per year compared to just holding the ETF long term. Not quite enough to make a day and night difference, but enough to make it worth it.
Still, I personally wouldn't share it had I had one, since generally the more traders use it the less effective it gets.
There's no reason for the average investor to trade ETFs at all when no load mutual funds exist. You can use vanguard directly or etrade (or a billion other companies) for that.
It's not but then it's more appropriate to use a VC vehicle where the money is locked up then an open ended fund that people can buy or sell every day. ETF is also investible by normal people, not just accredited investors.
Exactly. The ETFs just make the liquidity issues public on the market. For the fund, you'd be paying some managers to buy and sell stuff whenever enough people/money leaves or enters the fund.
You're spot on about commodity ETFs. They are required to buy at a certain time and sell at another time. Actually they're windows but they're well published. As you might be able to guess traders have had a field day with these funds. Most don't even closely track the commodity they're supposed to. Many have lost money while the commodity has gone up.
ETFs allow for liquidation any time during trading hours. Mutual funds typically only allow withdrawal once a day using closing marks. ETFs are also structured more efficiently for taxation purposes than mutual funds.
ETFs, the index ones most people use anyway, just track the market and do so very closely. There's no market timing effect from buying or selling the ETFs.
NEVER hold levered ETFs for more than a day or so. They decay horribly and in markets where there's a lot of volatility, they decay very quickly. You will lose a lot of money buying and holding any type of levered ETF.
It isn't myth. Prospectus of these leveraged ETFs say don't hold these instruments over a day. This is from JNUG which is popular with millennials:
"Because of daily rebalancing and the compounding of each day’s return over time, the return of the Fund for periods longer than a single day will be the result of each day’s returns compounded over the period, which will very likely differ from 300% of the return of the Index over the same period. The Fund will lose money if the Index performance is flat over time, and as a result of daily rebalancing, the Index’s volatility and the effects of compounding, it is even possible that the Fund will lose money over time while the Index's performance increases."
I am actually becoming a bigger fan of etfs. Generally lower fees, can set a limit instead of buying/selling at end of day blind, and you actually get the dividends from the stocks for a dividend etf.
I am not at all clear why you wouldn't do this if you are just tracking an index.
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