Even though they are very similar, ETFs beat Mutual Funds in different aspects.
Compared to mutual funds, ETFs have the following benefits:
- Low costs: Sarwa's selected ETFs' average expense ratio is roughly 0.1%, while mutual funds' expense ratio is 1-2%.
- Liquidity: Since they trade like stocks, meaning you can enter and exit the markets faster.
- Passive investment: While mutual funds are active investments. Studies after studies have shown that active investments do not hit their benchmarks, deeming passive investing a better strategy.
- Transparency: Since they disclose their earnings daily, allowing you to know your earnings at any point in time.
- Low minimum initial investment: Allowing you to begin investing with a much smaller amount.
All these factors considered make ETFs a better choice for investors than mutual funds.