Differences Between Equity Trading & Mutual Funds

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The difference between equity trading and mutual funds is that mutual funds trade once a day and equities can be traded at any time during the day. Learn how equity traded funds, or closed-end mutual funds, trade in the same way as equities with information from an investment manager in this free video on investing.

Part of the Video Series: Stocks & Mutual Fund Investments
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Video Transcript

Okay, the difference between equity trading and trading of mutual funds is pretty straightforward. Mutual funds trade once a day. And if you're talking about a normal, open-ended mutual fund, which is the standard mutual fund that you might be aware of, that you're used to seeing, those mutual funds will trade once a day at the end of the day on the market. You can't trade during the day. No matter when you place your trade, it will trade at the end of the day. If it's a closed-end mutual fund, a closed-end mutual fund trades like a stock. It will have a three digit...a three letter ticker symbol, and that can be traded like...just like an equity. And those are commonly referred to as ETFs, or equity traded funds, and those are mutual funds that act a little differently. You will pay commissions, or whatever fees you need to as you would with a stock. And again, equities, equities trade the same way. Equities trade during the day, anytime during the day, and you can trade it multiple times during the day, as you can with an ETF, or an equity traded fund. So, the big difference between equity traded funds or equities themselves, and mutual funds, is mutual funds you trade once a day. Equity traded funds and stock, you can trade anytime while the market's open.

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