ETFs vs. mutual funds: Key differences explained

Note: Mutual funds aren’t available for trading via Crypto.com Stocks. The information in this article is for educational purposes only.

What are ETFs and mutual funds?

What are ETFs?

ETFs are investment funds that hold a collection of assets, such as stocks, bonds or commodities. When you purchase an ETF share, you’re buying a proportional slice of everything inside the fund. 

One defining feature is that ETFs trade on major stock exchanges throughout the trading day – just like individual equities. Their prices update in real time, reflecting supply and demand, market sentiment and the value of underlying assets.

ETFs vary widely in focus. Some track broad market indices, others concentrate on specific sectors, styles or themes. Because many follow index-based strategies and use streamlined fund structures, ETFs often carry lower expense ratios. 

What are mutual funds?

Mutual funds also pool investor capital, but they work differently than ETFs. Investors buy and sell mutual fund shares directly with the issuing fund company and all orders are executed at the fund’s net asset value (NAV), which is calculated once per day after markets close. 

Unlike ETFs, mutual funds don’t have intraday price changes – you get the same NAV price as every other investor for that day.

Some mutual funds are actively managed by professional portfolio managers aiming to outperform a benchmark, while others follow index-tracking strategies similar to many ETFs. Mutual funds often have minimum investment requirements and may charge additional fees, such as loads or distribution fees. 

Note: Crypto.com Stocks doesn’t offer mutual funds.

How do ETFs work?

ETFs work a lot like regular stocks. You can buy or sell them on an exchange throughout the trading day, and their prices move in real time based on what buyers and sellers are doing. Even though the price changes during the day, it usually stays close to the value of the assets inside the fund.

ETFs also have costs to be aware of. The main one is the expense ratio, an annual fee taken directly from the fund’s assets. Investors may also see bid-ask spreads, which are small differences between the buying and selling prices. Trading fees depend on the platform, but with Crypto.com Stocks, you can buy ETFs at 0% commission,* helping keep overall costs low.

Because they show real-time prices, reveal their holdings frequently and can be bought in fractional amounts, ETFs tend to be easier for beginners to understand while still offering flexibility for more experienced investors. 

Access ETFs, price charts and more under the ‘Trade’ tab on the Crypto.com App. Make sure you have an active Crypto.com Stocks account.

How do mutual funds work?

Mutual funds work differently from ETFs because they don’t trade on exchanges during the day. Instead, all buy and sell orders are processed once per day after the market closes. At that point, the fund calculates its NAV – the price every investor receives for that day’s transactions.

This setup creates a more hands-off experience, since you don’t have to follow intraday price movements.

Mutual funds can be actively managed, where professional managers make investment decisions throughout the year, or passively managed, where the fund simply follows a benchmark index. Active management tends to come with higher expense ratios, while passive mutual funds may have lower costs but can still include fees that aren’t typically part of ETF trading.

Many mutual funds also have minimum investment requirements, which can range from a few hundred dollars to several thousand. Because they trade once daily, often involve structured fees and are commonly used in long-term planning, mutual funds frequently appear in retirement accounts or employer-sponsored investment plans.

Key differences between ETFs and mutual funds

ETFs and mutual funds share the idea of pooled investing but differ in how they’re managed, traded and priced.

• Trading flexibility is one of the most notable differences. As mentioned, ETFs trade throughout the day, giving investors constant visibility and control. Mutual funds only price once daily, which might be preferred by those who prefer a more structured approach.
• Costs also tend to differ. ETFs generally have lower expense ratios and on platforms like Crypto.com Stocks, they’re available at 0% commission.* Mutual funds may include additional fees, such as sales loads or distribution charges, which can affect long-term returns.
• Minimum investment requirements are typically lower for ETFs, especially when fractional shares are available. Mutual funds often require a set initial amount, which can be a barrier for new investors.
• Management style varies by product type. While ETFs are largely associated with passive, index-tracking strategies, they can be active as well. Mutual funds have a strong tradition in active management, though index mutual funds also exist.
• Risk exposure depends on the underlying assets rather than the structure itself. Both ETFs and mutual funds can invest in conservative or aggressive assets, but ETFs offer intraday visibility that some investors find helpful when managing market risk.

Remember, mutual funds aren’t available for trading via Crypto.com Stocks. The information in this article is for educational purposes only.

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1. Sign up securely on the Crypto.com App and open a Crypto.com Stocks account.
2. Deposit funds via bank transfer (always free),* card, Apple Pay or Google Pay.
3. Head to ‘Trade’ and explore hundreds of ETFs available at 0% commission.*

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