Investing in Dividends for Dummies by Carrel Lawrence;

Author:Carrel, Lawrence; [Carrel, Lawrence]
Language: eng
Format: epub
Publisher: John Wiley & Sons, Incorporated
Published: 2023-07-28T00:00:00+00:00

You can’t use any of these trading orders with a mutual fund.

Reducing your cost of ownership

Although some ETFs are actively managed, most equity ETFs are index funds (funds that are passively managed). Because index funds have low management costs, ETFs typically charge an expense ratio (the amount of the annual operating expenses) lower than almost all actively managed mutual funds. In addition, they usually charge less than comparable index-based mutual funds.

Table 6-1 shows the differences in expense ratios among mutual funds and ETFs. The first number is the asset-weighted average net expense ratio for all mutual funds, 1 percent, or one percentage point. That means you pay the fund $10 for every $1,000 invested you've invested in the fund. Meanwhile, the comparable number for ETFs is 0.57 percent, or $5.70 for every $1,000 invested. Active ETFs charge 0.72 percent versus active mutual funds fee of 1.01 percent.

TABLE 6-1 The Average Net Expense Ratio

Group

Expense Ratio

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