ETFs vs Mutual funds

Managed investment products such as exchange-traded funds (ETFs) and mutual funds pool money from investors for the purpose of trading securities and earning a profit. In return, those funds charge a fee, known as the Management Expense Ratio (MER) for their ongoing efforts in managing and operating the fund.

For many decades, mutual funds were in the spotlight, the MVP of managed investing. Investors parked their hard-earned money in the fund, expecting to have it invested and of course, earn a profit. But as time passed by, technology advanced, and people’s expectations changed. This change opened up the doors for new players to enter the market.

In 1990 the world's first ETF was created in Canada. Three years later we saw the first U.S. exchange-traded fund (ETF): the SPDR S&P 500, which tracks the S&P 500 index. From one fund in 1993, the combined U.S. exchange-traded products market passed $10 trillion in assets under management as of September 2024. Today, there are thousands of Canadian & U.S. listed ETFs in the market, each one serving a different purpose.

Note: The information in this blog is for educational purposes only and should not be used or construed as financial or investment advice by any individual. Information obtained from third parties is believed to be reliable, but no representations or warranty, expressed or implied, is made by Questrade, Inc., its affiliates or any other person to its accuracy.