Why is a mutual fund better than an etf?

Mutual funds are generally purchased directly from investment companies rather than from other investors on an exchange. Unlike ETFs, they don't have trading fees, but they do entail an expense ratio and, possibly, other sales fees (or charges). Both ETFs (exchange-traded funds) and mutual funds offer exposure to a wide variety of asset classes and niche markets. They generally offer more diversification than a single stock or bond, and can be used to create a diversified portfolio when combining funds from several asset classes.

Mutual funds are an older way of allowing a group of investors to own a stake in a larger portfolio. Mutual funds tend to be actively managed, so they try to exceed their benchmark and may charge higher expenses than ETFs, including the possibility of receiving sales commissions. Mutual funds usually have minimum initial purchase requirements and can only be purchased after the market closes, when their net asset value (NAV) is calculated and established. ETFs generally have lower fees than mutual funds and lower minimum purchases.

You can buy mutual funds and ETFs through a bank, investment firm, fund manager, brokerage account, or any other company that buys and sells them. Generally, a broker may require you to buy at least one stock in a fund to make a purchase, although today many brokerages allow you to buy fractional shares.