What are the main differences between an ETF and a Mutual Fund?
The main difference between ETFs and mutual funds are the way both are traded.
Shares of an ETF can be bought and sold anytime that a stock exchange is open; however, mutual funds trade only once a day after the stock market closes. An investor may use various trading strategies with ETFs that cannot be otherwise achieved with mutual funds, such as shorting, using margin or placing limit orders.
How do distributions work … cash or a DRIP?
Both cash and DRIP features are possible in an ETF. These days, most DRIPs (Dividend Reinvestment Programs) are administered by the broker. It’s best to check with your investment advisor if you are interested in employing a DRIP strategy.
You recently surveyed Financial Advisor’s on their interest in ETFs… can you shed some light into what or how sentiment is for these trading vehicles? What about Investors’ interest? Is that similar?
The survey, which asked slightly more than 150 Canadian investment advisors about investor sentiment across several topics, revealed that advisors expect a 50% increase in their allocation to ETFs over the next two years. This means there will be an additional $32 billion in ETF assets from advisors’ clients within that time frame. Investors are looking to ETFs because of their low fees, the ability to capitalize on a specific theme, and liquidity, according to the study.
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