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To: expat_panama
Here's the difference

Lets say you have $100,000 available and on a Sunday the Saudis announce that they will cut pumping oil by 1 million barrels per day. You can be 100% sure that on Monday the price of oil will go up quite a bit.

Now here are the differences between the EFT and Mutual Fund.

If you put in a 100K order in an Energy Mutual Fund the price you'll get it at will be the price at the end of the day at closing on Monday. So if there's a 5% increase you don't get it at $100,000 you get your shares at $105,000.

With an Energy EFT you can put in your order on Sunday and get your shares at the Monday open for $100,500 or whatever then ride it up all day then sell at 3:59 EST and make $4500 (4.9%) profit or whatever it is.

With the mutual fund you are always a day behind and it's recommended to never day trade a mutual fund or trade it at all.

I've simplified this quite a bit but it will give you a general idea what the differences between the two are?

5 posted on 04/19/2015 8:36:32 AM PDT by america-rules
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To: america-rules
For me the interday trading is part of the etf advantage the other being lower fees.   Something I'm trying to get into now is Factor Investing that etf's are making possible.
8 posted on 04/19/2015 9:03:40 AM PDT by expat_panama
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