What is the difference between a mutual fund and an ETF?
Order ID |
53563633773 |
Type |
Essay |
Writer Level |
Masters |
Style |
APA |
Sources/References |
4 |
Perfect Number of Pages to Order |
5-10 Pages |
Description/Paper Instructions
What is the difference between a mutual fund and an ETF?
Description/Paper Instructions
A mutual fund and an exchange-traded fund (ETF) are both investment vehicles that pool money from multiple investors to purchase a portfolio of securities. However, there are several key differences between the two types of
investment vehicles:
Management style: Mutual funds are typically actively managed by a portfolio manager who makes decisions about which securities to buy and sell in the fund’s portfolio. ETFs, on the other hand, are passively managed, with the portfolio of securities in the ETF mirroring a specific market index, such as the S&P 500.
Trading: Mutual funds can only be bought or sold once per day at the end of the trading day, at the net asset value (NAV) price. ETFs, on the other hand, are traded on stock exchanges just like individual stocks and can be bought or sold at any time during the trading day at market prices.
Cost: Mutual funds often have higher management fees than ETFs due to the active management style. Additionally, mutual funds often have additional expenses such as 12b-1 fees, which are used to cover the cost of marketing and distribution of the fund. ETFs typically have lower management fees and fewer additional expenses.
Diversification: Both mutual funds and ETFs offer diversification by investing in a portfolio of securities. However, mutual funds often invest in a limited number of securities, while ETFs can hold hundreds or even thousands of securities in a single fund, offering a broader level of diversification.
Tax implications: The way in which mutual funds and ETFs are taxed can also differ. Mutual funds are often subject to capital gains taxes when securities are sold in the fund’s portfolio, which can result in taxable distributions to the fund’s shareholders. ETFs, on the other hand, are typically structured in a way that minimizes the need to sell securities in the fund’s portfolio, reducing the amount of taxable distributions to the fund’s shareholders.
In conclusion, mutual funds and ETFs are both investment vehicles that pool money from multiple investors to purchase a portfolio of securities. However, there are several key differences between the two types of investment vehicles, including management style, trading, cost, diversification, and tax implications. Investors should carefully consider these differences and determine which type of investment vehicle is best suited to their investment goals and risk tolerance.
What is the difference between a mutual fund and an ETF?
RUBRIC
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SATISFACTORY |
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Content (worth a maximum of 50% of the total points) |
Zero points: Student failed to submit the final paper. |
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30 points out of 50: The essay illustrates a rudimentary understanding of the relevant material by mentioning but not full explaining the relevant content; identifying some of the key concepts/ideas though failing to fully or accurately explain many of them; using terminology, though sometimes inaccurately or inappropriately; and/or incorporating some key claims/points but failing to explain the reasoning behind them or doing so inaccurately. Elements of the required response may also be lacking. |
40 points out of 50: The essay illustrates solid understanding of the relevant material by correctly addressing most of the relevant content; identifying and explaining most of the key concepts/ideas; using correct terminology; explaining the reasoning behind most of the key points/claims; and/or where necessary or useful, substantiating some points with accurate examples. The answer is complete. |
50 points: The essay illustrates exemplary understanding of the relevant material by thoroughly and correctly addressing the relevant content; identifying and explaining all of the key concepts/ideas; using correct terminology explaining the reasoning behind key points/claims and substantiating, as necessary/useful, points with several accurate and illuminating examples. No aspects of the required answer are missing. |
Use of Sources (worth a maximum of 20% of the total points). |
Zero points: Student failed to include citations and/or references. Or the student failed to submit a final paper. |
5 out 20 points: Sources are seldom cited to support statements and/or format of citations are not recognizable as APA 6th Edition format. There are major errors in the formation of the references and citations. And/or there is a major reliance on highly questionable. The Student fails to provide an adequate synthesis of research collected for the paper. |
10 out 20 points: References to scholarly sources are occasionally given; many statements seem unsubstantiated. Frequent errors in APA 6th Edition format, leaving the reader confused about the source of the information. There are significant errors of the formation in the references and citations. And/or there is a significant use of highly questionable sources. |
15 out 20 points: Credible Scholarly sources are used effectively support claims and are, for the most part, clear and fairly represented. APA 6th Edition is used with only a few minor errors. There are minor errors in reference and/or citations. And/or there is some use of questionable sources. |
20 points: Credible scholarly sources are used to give compelling evidence to support claims and are clearly and fairly represented. APA 6th Edition format is used accurately and consistently. The student uses above the maximum required references in the development of the assignment. |
Grammar (worth maximum of 20% of total points) |
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5 points out of 20: The paper does not communicate ideas/points clearly due to inappropriate use of terminology and vague language; thoughts and sentences are disjointed or incomprehensible; organization lacking; and/or numerous grammatical, spelling/punctuation errors |
10 points out 20: The paper is often unclear and difficult to follow due to some inappropriate terminology and/or vague language; ideas may be fragmented, wandering and/or repetitive; poor organization; and/or some grammatical, spelling, punctuation errors |
15 points out of 20: The paper is mostly clear as a result of appropriate use of terminology and minimal vagueness; no tangents and no repetition; fairly good organization; almost perfect grammar, spelling, punctuation, and word usage. |
20 points: The paper is clear, concise, and a pleasure to read as a result of appropriate and precise use of terminology; total coherence of thoughts and presentation and logical organization; and the essay is error free. |
Structure of the Paper (worth 10% of total points) |
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5 points out of 10: Appearance of final paper demonstrates the student’s limited ability to format the paper. There are significant errors in formatting and/or the total omission of major components of an APA 6th edition paper. They can include the omission of the cover page, abstract, and page numbers. Additionally the page has major formatting issues with spacing or paragraph formation. Font size might not conform to size requirements. The student also significantly writes too large or too short of and paper |
7 points out of 10: Research paper presents an above-average use of formatting skills. The paper has slight errors within the paper. This can include small errors or omissions with the cover page, abstract, page number, and headers. There could be also slight formatting issues with the document spacing or the font Additionally the paper might slightly exceed or undershoot the specific number of required written pages for the assignment. |
10 points: Student provides a high-caliber, formatted paper. This includes an APA 6th edition cover page, abstract, page number, headers and is double spaced in 12’ Times Roman Font. Additionally, the paper conforms to the specific number of required written pages and neither goes over or under the specified length of the paper. |
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