• 
  

• Mutual funds and exchange-traded funds (ETFs) are similar in many ways. Both are made up of a variety of assets and are popularly used by investors to diversify their portfolios. While these two funds may have striking similarities, they also have some significant distinctions. In this article, we will look at some of the major differences between these two funds.

   What are mutual funds and ETFs?

  Mutual funds are made up of a pool of money collected from many investors to invest in securities like stocks, bonds, money market instruments, and other assets. ETFs on the other hand are exchange-traded funds that generally track a specific index. When you buy an ETF, you get a collection of assets that can be traded during market hours.

   Click here learn more about ETFs in Nigeria

   So, what are core differences between ETFs and Mutual Funds?

   1. Trading: ETFs can be traded during market hours like stocks, whereas mutual funds can only be purchased at the end of each trading day at a calculated price called the net asset value.

   2. Fund Management: Most mutual funds are actively managed, meaning that fund managers make decisions on how to distribute assets within the fund. Whereas ETFs are mostly passively managed 

  3. Capital: Mutual funds often have a higher minimum investment requirement compared to ETFs because they require more time, effort, and personnel for security research and analysis.

  4. Pricing: Because ETFs are traded on a stock exchange, the fund’s value is determined by market forces. If the fund is in high demand, it may be priced higher than its net asset value, which is the underlying value of the securities it holds. Mutual funds, on the other hand, are always priced at their net asset value at the end of each trading day.
  

  
  

As demands for cost-effective, low-risk, diversified, and income-generating investment instruments continue to grow among investors­ owing to economic uncertainties, Exchange Traded Funds (ETFs) have become one of the viable investment options for investors. However, this aspect of the capital markets is less understood by the public, with questions like ‘What are ETFs, how can an investor benefit from this instrument and how can they be accessed?’ often asked.

In view of this, Parthian Securities Limited is set to host the investing public to a virtual Investment Clinic themed, “Exchange Traded Funds (ETFs): What they are and how to access them in Nigeria” on Thursday, March 31, 2022, at 2:30 pm WAT. The session will offer investors free insights and analysis on the Nigerian Equity Market with a focus on ETFs as Strategists at Parthian Securities Limited sit with one of the major players in the ETFs space in Nigeria, Vetiva Fund Managers Limited to give in-depth answers to these questions and more.