Index mutual funds and index ETFs both aim to match a market index at very low cost. The underlying strategy is the same; the differences are in how you buy them, minimum investments, and some tax details.
| Feature | Index mutual fund | ETF |
|---|---|---|
| How it trades | Once per day at the closing price | All day, like a stock |
| Minimum investment | Often $1–$3,000 | Price of one share (or fractional) |
| Automatic investing | Easy, in dollar amounts | Depends on the broker |
| Tax efficiency | Good | Often slightly better |
| Expense ratios | Very low | Very low |