Beginner’s Guide to ETFs vs Mutual Funds

Investing can feel like a big adventure, but it doesn’t have to be scary. Two common ways to invest in the stock market are mutual funds and ETFs (exchange-traded funds). Think of both as baskets of investments: each basket holds many stocks, bonds, or other assets. By buying a share of a fund, you own a tiny piece of that basket. This spreads your risk – if one stock in the basket does poorly, others might do better and balance things out​.

Both mutual funds and ETFs are managed by professionals. Mutual funds usually mix money from many people to buy a mix of stocks or bonds. ETFs do the same, but there are some important differences in how you buy them, their costs, and taxes. In recent years (2024–2025) ETFs have grown a lot: for example, in 2024 about $1.9 trillion flowed into ETFs worldwide, pushing total ETF assets to about $14.7 trillion​. This growth shows how popular ETFs have become. However, mutual funds still hold trillions of dollars too, and many new investors start with them.

This guide will explain in simple terms how ETFs vs mutual funds work, how they’re similar, and how they differ. We’ll use clear analogies and real examples (in the US, India, and globally) so you can understand the basics. By the end, you’ll have a good idea of which might suit you better. We’ll also cover key points like costs, taxes, and a comparison table to see side-by-side differences. Let’s get started!

What Is a Mutual Fund?

A mutual fund is like a big cooking pot where many investors pour in money, and a fund manager (the “chef”) mixes it together. This money is used to buy a diversified portfolio of stocks, bonds, or other assets. Each investor owns “shares” of the fund, which represent a portion of that pot.

• Pooling money: Imagine you and your friends each put $100 into a pot. The chef (fund manager) takes that combined money ($1000 from 10 friends, for example) and buys lots of different ingredients (stocks/bonds). This lets everyone share the results of the meal (returns from stocks) in proportion to their $100.
• Daily pricing: Mutual funds are priced once per day, after markets close. This price is called the Net Asset Value (NAV). At the end of each trading day, the fund calculates NAV based on the closing prices of all its holdings. If you buy or sell mutual fund shares, you do so at the NAV price of that day. So whether you invest at 10:00 AM or 3:00 PM, you get the same end-of-day price.
• Buying and selling: You buy mutual fund shares directly from the fund company or through a broker, not on a stock exchange. Often you can start with a set dollar minimum (for example, many funds require $500 or $3,000 minimum). You can also buy in smaller increments or with fixed amounts, and many mutual funds let you set up automatic investments (like a monthly “Systematic Investment Plan” or SIP) for consistent saving​. This makes them beginner-friendly for regular investing.
• Active vs. passive: Many mutual funds are actively managed. That means a fund manager picks and changes the investments trying to beat the market. Others are index funds, which are passive. An index fund (a type of mutual fund) simply tries to match an index (like the S&P 500). Most active mutual funds tend to have higher fees, because managers actively trade and research.
• Examples (mutual funds): In the U.S., famous examples include the Vanguard 500 Index Fund (ticker VFIAX), which tracks the S&P 500 index, and the Fidelity 500 Index Fund (FXAIX), which does the same. Actively managed ones include things like Fidelity Contrafund (FCNTX). In India, popular mutual funds include SBI Bluechip Fund and HDFC Equity Fund, which invest in large Indian companies.

Investopedia sums it up well: “Mutual funds pool money from many investors to purchase a diversified portfolio of securities, such as stocks and bonds”. This means you get diversification (spreading out risk) even if you only invest a small amount. Mutual funds have been around for decades and are a simple way for beginners to invest with professional management.

What Is an ETF?

An ETF (Exchange-Traded Fund) is also a basket of investments, but with some special features. You can think of an ETF as a basket of fruit that you can buy and sell like a stock on an exchange. Here’s how it works:

• Trading like a stock: ETFs trade on stock exchanges (like the NSE in India or the NYSE in the U.S.) throughout the trading day. This means their price changes every minute as people buy and sell. If you place an order at 10:15 AM or 2:45 PM, you get the current market price at that time. In contrast, mutual fund orders only trade at the end-of-day NAV​​.
• Index vs active: Most ETFs are passive, meaning they track an index (like the Nifty 50 or S&P 500)​. They aim to match the performance of that index. However, there are also active ETFs where managers try to pick stocks (less common but growing). Passive ETFs usually have low fees.
• Intraday liquidity: Because ETFs trade like stocks, you can buy or sell them anytime during market hours, and you can also use trading tools like limit orders or short selling (if your broker allows). This gives you flexibility: for example, you could sell an ETF immediately if the price moves against you.
• No fixed minimum: ETFs usually don’t have a dollar minimum. You buy whole shares of the ETF through your brokerage, and the minimum is just the price of one share​. For example, if an ETF trades at $100, you need $100 to buy one share. Some brokers now even allow fractional shares of ETFs. This contrasts with mutual funds, which often have a fixed minimum investment (e.g. $500 or more).
• Tax efficiency: ETFs often save you tax money. Because of the way they are structured (using “in-kind” creations and redemptions), they usually generate fewer capital gains distributions than mutual funds. We’ll explain this more in the tax section below.
• Examples (ETFs): In the U.S., famous ETFs include the SPDR S&P 500 ETF Trust (SPY) and Vanguard S&P 500 ETF (VOO), both tracking the S&P 500 index. There’s also Invesco QQQ (tracks the NASDAQ-100 index) and Vanguard Total Stock Market ETF (VTI). In India, some well-known ETFs are Nippon India ETF Nifty 50 BeES (tracks Nifty 50) and SBI ETF Nifty Bank (tracks Bank Nifty). Globally, iShares (by BlackRock) and Vanguard offer many ETFs tracking international markets, such as iShares MSCI Emerging Markets ETF (EEM) or Vanguard Total World Stock ETF (VT).

As Investopedia notes, “Exchange-traded funds (ETFs) combine features of both mutual funds and stocks. Like mutual funds, they offer a diversified portfolio. However, unlike mutual funds, ETF shares trade like stocks on exchanges, with prices fluctuating throughout the day”​. In other words, an ETF is like a mix of both: you get the diversification of a fund and the trading flexibility of a stock.

How ETFs and Mutual Funds Are Alike

Before diving into differences, it helps to see how ETFs and mutual funds are similar. They share several key features:

• Diversification (baskets of investments): Both ETFs and mutual funds pool money from many investors to buy a variety of stocks, bonds or other assets. This spreads out risk. For example, instead of investing in one company, a fund lets you own tiny pieces of 50, 100 or even more companies all at once. This is great for beginners, since you get instant diversification. Charles Schwab explains: “Mutual funds and the majority of ETFs represent managed ‘baskets’ or ‘pools’ of individual securities, like stocks or bonds”​.
• Professional management: Both types of funds are managed by professionals who decide which stocks or bonds to hold. This means you get expert handling without having to pick each stock yourself. As a result, newcomers find them easy to use.
• Variety of asset classes: ETFs and mutual funds come in many flavors. You can find equity funds (stocks), bond funds, commodity funds (like gold or oil), sector funds (like technology or healthcare), and more. Whether you want U.S. large-cap stocks, Indian mid-caps, or international bonds, there’s likely an ETF and a mutual fund covering that theme.
• Passive and active options: Both offer passive (index-tracking) and active versions. Passive funds aim to mirror an index. Active funds try to beat the market by picking stocks. ETFs started mostly passive, but active ETFs are becoming more common​. Mutual funds historically were mostly active, though index mutual funds are now very popular too.
• Regulation and safety nets: In many countries, mutual funds and ETFs are regulated similarly. For example, in the U.S. they must register under the Investment Company Act of 1940. This means they have to report holdings, follow diversification rules, and issue prospectuses. Both provide some investor protection (though they are not FDIC insured like bank deposits).
• No guarantee of profit: It’s important to remember that neither ETFs nor mutual funds guarantee you profit. The basket can go up or down. But both are generally safer and more diversified than picking a single stock.

In short, both vehicles let you “own” a basket of assets managed by professionals. This is often described as a convenient way to invest. For example, Investopedia’s mutual fund guide says they’re “a convenient way for individuals to invest in a diversified portfolio of securities”​. And ETFs offer the same diversification but with stock-like trading.

Key Differences: How They Work and Trade

Even though ETFs and mutual funds are similar, the details of how they trade and operate are quite different. Here are the main differences:

• Trading Times and Pricing: ETFs trade on an exchange all day long at market prices. Imagine a stock: its price goes up and down each minute. An ETF’s price does the same. In contrast, a mutual fund’s price is set once per day after the market closes. All buy or sell orders for that day happen at the final NAV price​. For example, if you place an ETF buy order at 10:00 AM, you might pay $50.20. But if someone else buys at 2:00 PM, they might pay $50.50 if the market moved. With a mutual fund, everyone pays the same price: say the end-of-day NAV of $50.35. Charles Schwab explains: “ETFs trade like stocks… experiencing price changes throughout the day… Mutual fund orders are executed once per day, with all investors on the same day receiving the same price”​.
• Order Types: Because ETFs trade like stocks, you have more tools: you can use limit orders (set a maximum buy or minimum sell price), stop-loss orders, and even buy on margin or sell short (in some cases). Mutual funds do not offer these; you simply place an order to buy or sell, and it executes at the NAV at day’s end.
• Minimum Investments and Share Sizes: ETFs usually require you to buy whole shares (though fractional shares are becoming more common). There is typically no set minimum amount beyond the price of one share​. For mutual funds, the company may require a minimum initial investment (often several hundred or thousand dollars). You can usually buy mutual funds in fractional shares or fixed-dollar amounts; for example you could invest exactly $100 in a mutual fund even if that’s 0.8 of a share​.
• Fee Structure (Costs): Both have ongoing fees called expense ratios, but the rest of the cost structure differs.
  • ETFs: You usually pay a brokerage commission (though many brokers now offer $0 commissions on ETFs). You also deal with the bid-ask spread – the difference between buying and selling prices. If an ETF isn’t heavily traded, this spread can add a small cost. The fund itself charges an annual expense ratio (often low, especially for index ETFs, e.g. 0.03%–0.20%). ETFs typically do not charge sales loads or front-end fees.Mutual Funds: Many mutual funds don’t charge a trading commission (you buy directly from the fund company). However, they may charge other fees: for instance, a sales load (a commission paid to the broker) or a 12b-1 fee (marketing fee). Plus they also have an expense ratio, which can be higher for actively managed funds. Schwab notes: “Mutual funds can be purchased without trading commissions, but… they may carry other fees (for example, sales loads or early redemption fees)”​.
  In practice, most broad index ETFs have very low fees (sometimes as low as 0.03%) and no sales loads. Actively managed mutual funds often have fees closer to 1% or more, plus possible loads. A Morningstar report found that “the average active ETF fee is 36% cheaper than the average active mutual fund fee”​.
• Tax Treatment: Taxes are a big difference (see next section for more). In general, ETFs tend to be more tax-efficient than mutual funds. This is because ETFs use a “creation/redemption” process that often avoids triggering capital gains. Mutual funds usually have to sell securities within the fund when investors redeem, which can create taxable gains for all shareholders. Fidelity explains: “holding an ETF in a taxable account will generate less tax liabilities than if you held a similarly structured mutual fund”​.
• Transparency of Holdings: ETFs usually publish their holdings daily, so you can always see what’s in the fund. Mutual funds often report holdings quarterly. If you like knowing exactly what is inside your basket each day, ETFs offer more transparency.
• Trading Liquidity: ETFs depend on stock market liquidity. Popular ETFs (like SPY or VOO) trade millions of shares per day, so it’s easy to buy or sell. Some very small ETFs may have low volume, leading to bigger bid-ask spreads. Mutual funds typically have good liquidity since you can always redeem directly with the fund at NAV, but sometimes funds can impose redemption fees or limits if too many people sell at once.

Comparison Table: The table below summarizes these differences side by side. It helps to see at a glance how ETFs and mutual funds compare on key features:

This table highlights the core contrasts. For example, you can see ETFs let you trade anytime during the day (like stocks), while mutual funds only price at day’s end. ETFs usually have lower fees and better tax efficiency, but mutual funds allow easy automatic investing and fractional purchases​.

Costs and Fees

When comparing ETFs vs mutual funds, fees and costs are important. Both charge an expense ratio (the annual fee on the total assets of the fund), but the rest of the cost picture differs:

• Expense Ratios: Generally, ETFs have very low expense ratios, especially index ETFs. For example, many S&P 500 index ETFs charge 0.03%–0.10% per year. Vanguard and iShares are famous for low fees. Index mutual funds often have slightly higher fees (e.g. 0.1%–0.3%). Active mutual funds can be expensive (0.5%–2% or more). Remember, a 1% fee on your investment every year can add up over decades, so fees matter. As one report noted, the average active ETF fee is about 36% cheaper than the average active mutual fund fee​.
• Transaction Costs: If you trade ETFs, you might pay a commission or fee per trade (though many brokerages now offer zero-commission ETFs). You also face the bid-ask spread: that tiny gap between buying and selling prices. For large, popular ETFs (like SPY), this spread is very small (a few cents). For thinly traded ETFs, it can be bigger (adding a small cost). Mutual funds usually have no commission when you buy directly from the fund company. But some mutual funds charge a sales load (a commission of, say, 2%-5% of your investment) either up front or when you sell. Also, some have an annual “12b-1 fee” for marketing (around 0.25%).
• Purchase Minimums: Many mutual funds require a minimum initial investment (often $1,000 or more) and sometimes a minimum for later investments. ETFs have no such minimum: you can start with just the price of one share. For example, if an ETF trades at ₹1000, you can buy one share for ₹1000. Some fund houses let you start a mutual fund SIP with as little as ₹500, which is a type of automatic investing, but the rules vary.
• Tax Costs: Discussed more below, but a quick note: taxes can be viewed as a cost. ETFs often lead to lower tax bills (fewer yearly capital gains), which effectively makes them cheaper for investors in taxable accounts​.

In practice, if you plan to hold an index fund for the long run in a tax-advantaged account, costs might be similar. But in taxable accounts or for active strategies, ETFs often win on costs. One study of active funds found that active ETFs have much lower fees than active mutual funds​. Of course, always check the expense ratio and any loads of any fund before investing.

Tax Implications

Taxes can make a big difference to your real returns. The structure of ETFs vs mutual funds leads to different tax outcomes, especially in taxable accounts (outside retirement accounts).

• Capital Gains Distributions: When a mutual fund manager sells stocks in the fund at a profit, the fund must pass those gains (after offsetting losses) on to all shareholders. You have to pay tax on those distributions in the year they occur, even if you didn’t sell your own shares. This can happen surprisingly often. In contrast, ETFs use a special “in-kind” creation/redemption process. When large institutional investors trade ETF shares, they exchange baskets of securities with the ETF issuer. This means the ETF rarely has to sell holdings for cash. As a result, ETFs usually distribute few or no capital gains to investors​. In simpler terms: ETFs tend to be more tax-efficient. Fidelity sums it up: “Holding an ETF in a taxable account will generate less tax liabilities than if you held a similarly structured mutual fund in the same account”​. Investopedia agrees: ETFs “usually don’t generate the capital gains distributions that mutual funds do”​. So if you hold a traditional stock mutual fund in a regular brokerage account, you might get a capital gains tax bill each year. If you hold a similar ETF, those gains might be delayed until you sell your ETF shares.
• Dividends: Both ETFs and mutual funds pass through dividend income. If your fund holds stocks, you’ll pay tax on dividends according to the rules in your country. There’s no big advantage of one vehicle over the other here – it depends on local tax laws. Just be aware that both will send you a tax form for dividends at year-end.
• Different Countries: Tax rules vary by country. For instance, in the U.S., long-term capital gains (from assets held over 1 year) have lower tax rates. Both ETFs and mutual funds will pass through gains to you, but ETFs often let you defer (and sometimes reduce) those gains. In India, equity ETFs held over 1 year have a 10% tax on gains above ₹1 lakh (similar to equity mutual funds). The key difference in India is still about when gains arise – ETFs tend to crystallize less gains during ownership.
• Summary: If you’re investing in a taxable account (not an IRA or 401(k)), taxes favor ETFs. You’ll likely pay less in capital gains taxes each year with an ETF than with an equivalent mutual fund​. This is one reason many financial advisors say “ETFs for taxable accounts, mutual funds for tax-deferred accounts”, though this rule has become less strict as brokers offer fractional ETF buys.

Pros and Cons of ETFs vs Mutual Funds

Choosing between ETFs and mutual funds often comes down to personal preference and your investment plan. Here’s a side-by-side list of pros and cons for each:

• ETFs – Advantages:
  • Intraday Trading: You can buy or sell anytime during market hours, giving you more control over timing.
  • Lower Costs: Many ETFs have very low expense ratios, and you often avoid sales loads. Bid-ask spreads are usually tiny for big ETFs.
  • Tax Efficiency: Fewer annual capital gains means potentially lower taxes in taxable accounts.
  • Transparency: ETF holdings are published daily, so you always know exactly what’s inside your basket.
  • Diversification: Just like mutual funds, ETFs give you instant diversification across an index or sector.
  • Flexibility: ETFs allow use of advanced orders (limit, stop) and in some cases short-selling or margin.
• ETFs – Disadvantages:
  • Trading Costs: Buying through a broker can incur fees (although many brokers now have $0 trading fees). You also lose a tiny bit in the bid-ask spread.
  • Bid-Ask Spread: For thinly traded ETFs, the spread might be significant, increasing your cost.
  • Must Buy Whole Shares: You may need the cash to buy at least one share (though fractional shares are becoming available).
  • Requires Brokerage: You need a brokerage account to trade ETFs, which is usually fine for most investors but adds a step.
  • No Automatic SIP: Traditionally, you can’t do automatic fixed-amount investments into ETFs (though this is changing). Many mutual funds allow monthly systematic investments.
• Mutual Funds – Advantages:
  • Automatic Investing: You can set up recurring investments (SIPs) in mutual funds easily. This helps beginners invest regularly from salary or savings.
  • No Need to Time Market: Since purchases happen at end-of-day NAV, you don’t have to worry about intraday price swings.
  • Fractional Shares: You can invest exact amounts; if one share costs $500, you could still invest $100 and get 0.2 shares.
  • Simplicity: All trades go through the fund company. Some retirement accounts only offer mutual funds (like 401(k) plans).
  • No Trading Fees: Buying and selling mutual fund shares usually has no commission (direct with fund).
• Mutual Funds – Disadvantages:
  • Higher Fees: Actively managed mutual funds often charge higher expense ratios and may have sales loads or 12b-1 fees. Over time these costs add up.
  • Less Tax Efficient: You may owe capital gains taxes on a mutual fund even if you didn’t sell any shares, because the fund manager might have sold holdings.
  • Less Trading Flexibility: You can’t trade mutual funds during the day, and you can’t use special stock order types. All orders get the day’s NAV price.
  • Minimum Investment: Many mutual funds require a few hundred or thousand dollars to start.

Analogy: One way to see it is this: a mutual fund is like a grocery store that closes at 6 PM and prices its whole inventory once a day. Everyone who shops before closing pays the same price at 6 PM. An ETF is like a convenience store open 24/7 with prices that change every minute based on demand. The grocery store lets you buy any quantity and often has deals for regular customers. The convenience store lets you shop anytime and might have lower everyday prices, but you pay a small fee (spread) each time you transact.

Popular Examples of ETFs and Mutual Funds

Let’s make things concrete by naming some real funds (2024–2025 examples) that investors use around the world. Remember, this is just a taste – there are thousands of funds.

• Big US Equity ETFs:
  • SPDR S&P 500 ETF Trust (SPY) – Tracks the S&P 500 index; one of the oldest and largest ETFs (over $570 billion AUM)​.
  • Vanguard S&P 500 ETF (VOO) – Also tracks the S&P 500, with very low fees; about $613 billion AUM.
  • iShares Core S&P 500 ETF (IVV) – Another S&P 500 tracker (~$562B AUM)​.
  • Vanguard Total Stock Market ETF (VTI) – Covers almost the whole U.S. stock market ($446B AUM)​.
  • Invesco QQQ Trust (QQQ) – Tracks the NASDAQ-100 (tech-heavy); ~$302B AUM​.
• Big US Equity Mutual Funds:
  • Vanguard 500 Index Fund (VFIAX) – S&P 500 index mutual fund (large-cap U.S. stocks).
  • Fidelity 500 Index Fund (FXAIX) – Similar S&P 500 index fund by Fidelity.
  • Vanguard Total Stock Market Index Fund (VTSAX) – Covers entire U.S. stock market.
  • T. Rowe Price Blue Chip Growth (TRBCX) – Example of an actively managed large-cap growth fund.
• Bond ETFs and Mutual Funds:
  • Vanguard Total Bond Market ETF (BND) – A broad U.S. investment-grade bond ETF (~$126B AUM)​.
  • iShares Core U.S. Aggregate Bond ETF (AGG) – Similar U.S. bond index (~$124B AUM)​.
  • Vanguard Total Bond Market Index Fund (VBTLX) – The mutual fund version of BND.
  • PIMCO Total Return Fund (PTTAX) – Once the world’s largest bond mutual fund (actively managed).
• International and Global Funds:
  • Vanguard Total International Stock ETF (VXUS) – Tracks global markets outside the U.S. (~$105B AUM).
  • iShares MSCI Emerging Markets ETF (EEM) – Focuses on emerging markets.
  • Vanguard FTSE All-World ex-US ETF (VEU) – Global ex-US.
  • Mutual funds: Many large companies (American Funds, Franklin Templeton, etc.) offer global equity funds.
• Sector and Thematic ETFs: (2024 trends)
  ETFs exist for almost any theme. For example, some popular bets in 2024 were on commodities and niche areas:
  • Agriculture: Invesco DB Agriculture Fund (DBA) – tracks agricultural commodity futures.
  • Energy/Oil: United States Brent Oil Fund (BNO) – tracks Brent crude oil.
  • Silver: iShares Silver Trust (SLV) – invests in physical silver​.
  • Cannabis: AdvisorShares Pure Cannabis ETF (YOLO) – invests in cannabis-related companies (high-risk)​.
  • Defense: iShares U.S. Aerospace & Defense ETF (ITA) – invests in defense contractors.
• India-specific:
  • Nippon India ETF Nifty BeES – India’s first ETF (launched 2002 on Nifty 50)​. Tracks the Nifty 50 index.
  • SBI Gold ETF – ETF that tracks gold price.
  • Mutual Funds: SBI Bluechip Fund, HDFC Top 100 Fund, and ICICI Prudential Bluechip Fund are examples of large active equity funds in India.
• Global Examples:
  Many investors worldwide use ETFs by big asset managers. For example, iShares Core MSCI EAFE ETF (IEFA) holds large companies in Europe, Australia, Asia ($132B AUM)​. In China and emerging markets, there are iShares and Invesco ETFs.

These examples show the range of options. As of 2024, “Every major ETF market saw inflows of between 20% and 30%”​, and investors keep creating new ETFs to meet demand. For instance, State Street (which issues SPY) notes that many new managers entered the ETF market recently.

ETFs vs Mutual Funds: Which Is Better?

Which is better – ETFs vs mutual funds? The honest answer is: It depends on you! Both vehicles can help you invest successfully. Here are some questions to consider:

• How do you want to trade? If you like the idea of buying or selling any time during the day, ETFs are better. If you prefer simplicity and don’t care about intraday prices, mutual funds are fine. For example, day traders or people who watch the market closely might lean to ETFs, while long-term investors using SIPs might prefer mutual funds.
• How much do you invest each time? If you have small amounts to invest on a schedule, mutual funds (or a no-minimum ETF) might be easier. However, many brokers now allow automatic ETF purchases, so this gap is closing.
• Costs and Taxes: If you’re in a taxable account (outside retirement accounts), ETFs often save on taxes. Also check fees: a passive index ETF might charge just 0.04%, whereas an active mutual fund might charge 0.8%. If your mutual fund has a load, ETFs may be cheaper.
• Active vs Passive Goals: If you believe active management will outperform (in some markets or for bonds), you might pick an active mutual fund or active ETF. If you just want broad market exposure cheaply, index ETFs are very popular.
• Account Restrictions: Some accounts (like certain retirement plans) may only offer mutual funds. If that’s your situation, ETFs may not be an option unless your broker has them.
• Automatic Investments: If you want to automate investments from your bank or paycheck, mutual funds (or use a direct stock purchase plan) have historically been easier. But again, this is changing as brokerages update their platforms.

Bottom Line: For most new investors, either choice can work. Many seasoned investors use a mix: e.g., an index mutual fund in a retirement plan, but an ETF in a taxable account. Vanguard’s advice is to focus on whether you want intraday trading or the ease of systematic investing.

Remember the keywords: For beginners, “ETFs vs mutual funds for beginners” is about understanding these basics. Some people ask “Mutual funds vs ETFs, which is better?” – and the answer is there’s no one-size-fits-all. It depends on your strategy, tax situation, and whether you value trading flexibility versus convenience.

Best ETFs of 2024 (And Why)

If you’re curious about which ETFs were popular or high-performing in 2024, several categories stood out:

• Broad Market Index ETFs: Large-cap index funds remained strong. For example, SPY and VOO (S&P 500 ETFs) delivered around 17–20% returns in 2024 as the U.S. market rose. QQQ (tech-heavy NASDAQ-100 ETF) often outperformed early in the year. These are staples for many portfolios due to their stability and low cost.
• Thematic/Commodity ETFs: With volatility, some investors looked to commodities. For instance, silver prices rose strongly in 2024. The iShares Silver Trust (SLV) saw big gains (around 15–25%)​. Similarly, ETFs like DBA (agriculture) or oil ETFs (like BNO for Brent oil) did well on commodity strength​.
• Sector ETFs: Technology and biotech sectors had ups and downs, but tech ETFs (like XLK or VGT) remain popular. Healthcare ETFs (XLV) and energy ETFs (XLE) are other sector plays.
• Emerging and International: Some emerging market ETFs (e.g., those focused on India, China, or Asia) and developed-market ETFs (like VEA for Europe/Asia) could be considered as part of a global mix.
• Bonds/Cash: For stability, bond ETFs like BND or AGG are often used by conservative investors. In 2024, these gave modest returns as interest rates stabilized.
• Gold ETFs: Gold prices often rise with uncertainty. In 2024, gold ETFs like GLD or SBI Gold ETF (India) saw gains (~10%). Gold mutual funds also performed similarly.

These are just examples. The “best” ETF depends on your goals: some look for growth (stocks), others income (bond ETFs), others inflation-hedge (gold, real estate). Always research any ETF’s strategy, holdings, fees, and risk.

(Note: We avoid giving personal financial advice. These examples illustrate popular ETFs in 2024, not recommendations.)

Summary and Next Steps

Both ETFs and mutual funds are powerful tools for beginners. They let you easily invest in diversified portfolios. ETFs trade like stocks during the day, usually have lower fees, and can be more tax-efficient. Mutual funds trade once daily, often allow small or automated investments, and may be simpler if you prefer a “set it and forget it” approach.

Key factors to decide include:

• Investment style: Active day trading vs. passive long-term planning.
• Costs and taxes: Compare fees (expense ratios, loads) and tax implications in your country.
• Convenience: Do you want automatic SIPs and fractional shares, or are you comfortable trading through a brokerage?
• Account type: If you’re investing through a retirement plan, you might be limited to certain mutual funds.

If you’re new, a good approach might be to try both on paper. For example, buy a small amount of an index ETF (like VOO or a Nifty ETF) and a similar index mutual fund, and see how each works in practice. Compare your statements (ETF shows prices daily; mutual fund shows NAV updates). Over time, you’ll get a feel for the differences.

Final take-away: There is no one “better” choice overall. Choose the option that fits your goals and situation. If you value flexibility, low fees, and tax efficiency, ETFs might win. If you value simplicity, automatic investing, and fractional shares, mutual funds might be easier.

Whichever you pick, remember to keep learning and stay informed (the industry is always evolving – for example, many mutual funds are converting to ETF formats nowadays). Use this guide as a starting point, and don’t hesitate to consult a financial advisor if you need personalized help. Happy investing!