Is an index fund an ETF?
Both ETFs and index mutual funds are pooled investment vehicles that are passively managed. The key difference between them (discussed below) is that ETFs can be bought and sold on the stock exchange (just like individual stocks)—and index mutual funds cannot.
Exchange-traded funds (ETFs) and index funds are similar in many ways but ETFs are considered to be more convenient to enter or exit. They can be traded more easily than index funds and traditional mutual funds, similar to how common stocks are traded on a stock exchange.
What's more, buying an S&P 500 ETF, or exchange-traded fund, is an easy way for investors to buy a big slice of the market for a relatively small price.
Vanguard has both index and active ETFs. Vanguard has both index mutual funds and actively managed funds. The strategy of investing in multiple asset classes and among many securities in an attempt to lower overall investment risk. These investment products hold hundreds to thousands of stocks, bonds, and more.
VOO's expense ratio is also slightly lower at 0.03% while VFIAX is at 0.04%. The most important difference between the funds is with structure, as VOO is an ETF that can be traded intra-day like a stock, whereas VFIAX is a mutual fund that trades at the end of the day.
Invesco QQQ is an exchange-traded fund based on the Nasdaq-100 Index®. The Fund will, under most circ*mstances, consist of all of stocks in the Index. The Index includes 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq Stock Market based on market capitalization.
If investors buy when an ETF is priced in excess of the index and sell when it's priced below the value of the index, they may end up costing themselves more than the expense ratio. The Vanguard S&P 500 ETF has managed a lower tracking error than the Vanguard Total Stock Market ETF: 0.02% vs 0.05%.
Both ETFs and index mutual funds are pooled investment vehicles that are passively managed. The key difference between them (discussed below) is that ETFs can be bought and sold on the stock exchange (just like individual stocks)—and index mutual funds cannot.
For beginners, the vast array of index funds options can be overwhelming. We recommend Vanguard S&P 500 ETF (VOO) (minimum investment: $1; expense Ratio: 0.03%); Invesco QQQ ETF (QQQ) (minimum investment: NA; expense Ratio: 0.2%); and SPDR Dow Jones Industrial Average ETF Trust (DIA).
Our recommendation for the best overall S&P 500 index fund is the Fidelity 500 Index Fund. With a 0.015% expense ratio, it's the cheapest on our list. And it doesn't have a minimum initial investment requirement, sales loads or trading fees. Over the last 10 years, FXAIX has returned an annualized 12.02%.
What is the downside of ETFs?
For instance, some ETFs may come with fees, others might stray from the value of the underlying asset, ETFs are not always optimized for taxes, and of course — like any investment — ETFs also come with risk.
The mutual fund operator has since become the second-largest provider of ETFs (by market cap) behind Blackrock. 3 Vanguard's unique cost structure, the economies of scale it has achieved, and the total number of assets under management (AUM) allow it to offer its ETFs at the lowest cost available in the market.
| Fund (ticker) | YTD performance | Expense ratio |
|---|---|---|
| Vanguard Information Technology ETF (VGT) | 8.6 percent | 0.10 percent |
| Financial Select Sector SPDR Fund (XLF) | 12.4 percent | 0.09 percent |
| Energy Select Sector SPDR Fund (XLE) | 13.5 percent | 0.09 percent |
| Industrial Select Sector SPDR Fund (XLI) | 10.8 percent | 0.09 percent |
The Vanguard S&P 500 (NYSEMKT: VOO) and the Vanguard Total Stock Market Index Fund ETF Shares (NYSEMKT: VTI) stand out as the fund's most cost-effective stock ETFs. Each has an expense ratio of just 0.03%.
VOO's analyst rating consensus is a Moderate Buy. This is based on the ratings of 505 Wall Streets Analysts.
S&P 500 5 Year Return is at 85.38%, compared to 83.02% last month and 55.60% last year. This is higher than the long term average of 45.20%. The S&P 500 5 Year Return is the investment return received for a 5 year period, excluding dividends, when holding the S&P 500 index.
Two popular ETFs are the Standard and Poor's depositary receipt (SPDR) launched in 1993 and the NASDAQ-100 Index Tracking Stock (QQQ) which was launched in 1999. These vehicles are popular for hedging as well as investment. Also known as ETF.
QQQ is the ticker symbol for Invesco QQQ, an exchange-traded fund (ETF) based on the Nasdaq-100 Index created by Invesco PowerShares. A Morse code signal for unknown attacker, used in conjunction with SOS.
- Invesco (QQQ) ...
- Invesco Nasdaq 100 ETF (QQQM) ...
- Fidelity Nasdaq Composite Index ETF (ONEQ) ...
- Direxion Nasdaq-100 Equal Weighted Index Shares (QQQE) ...
- Invesco Nasdaq Next Gen 100 ETF (QQQJ)
VOO Dividend Information
VOO has a dividend yield of 1.37% and paid $6.41 per share in the past year. The dividend is paid every three months and the last ex-dividend date was Mar 22, 2024.
Why choose an index fund over an ETF?
ETFs and mutual funds that track an index typically have lower management fees than actively managed ETFs or mutual funds. A mutual fund is priced once a day and all transactions are executed at that price, while the price of an ETF fluctuates throughout the day as it is bought and sold through an exchange.
Return on investment (ROI) allows you to measure how much money you can make on a financial investment like a stock, mutual fund, index fund or ETF. You can calculate the return on your investment by subtracting the initial amount of money that you put in from the final value of your financial investment.
Fidelity® Nasdaq Composite Index ETF. Tracks the performance of the Nasdaq Composite Index.
Most index funds pay dividends to their shareholders. Since the index fund tracks a specific index in the market (like the S&P 500), the index fund will also contain a proportionate amount of investments in stocks. For index funds that distribute dividends, many pay them out quarterly or annually.
An index fund is a portfolio of stocks or bonds designed to mimic the composition and performance of a financial market index. Mutual funds and exchange-traded funds (ETFs) have many different varieties of low-cost index funds. They have lower expenses and fees than actively managed funds.
