How do ETFs differ from mutual funds?

ETFs, or Exchange-Traded Funds, indeed trade on stock exchanges like stocks, which is a significant distinguishing feature compared to mutual funds. This means that investors can buy and sell ETF shares throughout the trading day at market prices, just as they would with individual stocks. This intraday trading capability offers investors greater flexibility and responsiveness to market conditions.

In contrast, mutual funds are priced and executed only once at the end of the trading day, which means any orders placed during the day will be processed at that day's closing price rather than at fluctuating prices throughout the day. Additionally, the expense structures of ETFs tend to be lower than those of mutual funds, which typically have more comprehensive fees associated with management and distribution. Finally, unlike products that guarantee fixed returns, neither ETFs nor mutual funds provide guarantees on return, as their performance is dependent on the underlying assets. Thus, the ability of ETFs to be traded like stocks is a fundamental aspect that distinguishes them from mutual funds.