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Lesson ETFs 101
ETFs vs Mutual funds
Understand the main difference between ETFs and Mutual funds.
Managed investment products such as exchange-traded funds (ETFs) and mutual funds pool money from investors for the purpose of trading securities and earning a profit. In return, those funds charge a fee, known as the Management Expense Ratio (MER) for their ongoing efforts in managing and operating the fund.
For many decades, mutual funds were in the spotlight, the MVP of managed investing. Investors parked their hard-earned money in the fund, expecting to have it invested and of course, earn a profit. But as time passed by, technology advanced, and people’s expectations changed. This change opened up the doors for new players to enter the market.
In 1990 the world's first ETF was created in Canada. Three years later, the first U.S. exchange-traded fund (ETF), was the SPDR S&P 500. It was created in 1993 and it tracks the S&P 500 index. From one fund in 1993, the combined U.S. exchange-traded products market grew to $3.7 trillion in assets under management as of September 2018. Today, there are thousands of Canadian & U.S. listed ETFs in the market. Each one serving a different purpose.
For many decades, mutual funds were in the spotlight, the MVP of managed investing. Investors parked their hard-earned money in the fund, expecting to have it invested and of course, earn a profit. But as time passed by, technology advanced, and people’s expectations changed. This change opened up the doors for new players to enter the market.
In 1990 the world's first ETF was created in Canada. Three years later, the first U.S. exchange-traded fund (ETF), was the SPDR S&P 500. It was created in 1993 and it tracks the S&P 500 index. From one fund in 1993, the combined U.S. exchange-traded products market grew to $3.7 trillion in assets under management as of September 2018. Today, there are thousands of Canadian & U.S. listed ETFs in the market. Each one serving a different purpose.
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