ETFs

Hi everyone, I looked through data of exchange-traded funds and don`t understand why ETFs are often cited as cheaper. What kind of data I checked

ETFs often have lower fees because there is less or no active management, thus those costs are not passed on to the investor through a fee or cost to the fund itself.

It basically depends on what you are comparing it to.  There are the ones that basically will track an index, say, SPY which tracks the S&P 500.  These are the passively managed types.  You do have more actively managed types, like the ones that will concentrate on a particular sector -- these will have the higher expense ratios or management fees.  This is maybe where you would compare ETFs to Mutual Funds.  You will, occasionally, have some savings on taxes when selling ETFs as opposed to Mutual Funds or individual stocks.

But the other way they are considered 'cheaper' is that you get a basket of stocks for one price.  You will have one transaction fee, etc.  Whereas, if you were to purchase the individual stocks in that ETF you would have multiple transaction fees, etc. 

There are some advantages of ETFs over Mutual Funds that might be ancillary to your savings.  One of them would be that they are traded all day long, as opposed to Mutual Funds that are traded once a day.  So, you could save sometimes on pricing, itself.

So, it depends exactly what ETF they were talking about and what they were comparing it to.

You can look up in several places online the differences in the different funds and the differences between ETFs or Mututal Funds or stocks, etc.  Or simply call your trading platform and they will explain it or direct you to where on their website you can find this out.