What are the differences among ETFs, closed-end funds, and open-end funds?

Oldman answered 10 months ago …

Etfs are exchange traded baskets of securities or bonds based upon some index-maker's decision tree of the secotor or industry. They also can be traded intraday, some are optionable and some have corresponding "inverse" ETFs that will rise when the index falls. They seldom deviate in value/price by more than 2 % from the Index they purport to "track". Closed end funds are baskets of stocks that are put togeteher by various companies, not based upon any index, but upon some investment theme. Those also can be sold short or long ant trade intrady. Mutual Funds are open-ended baskets, whose values are computed, based on the day's closing values of the securities the fund manager chose. They don't trade during the day, and they usually can't have options on them.

Go to

Http://www.seekingalpha.com

and it has extensive discussion of the >800 ETFs, >1200 CEFs, and mutual funds.

CEFs can trade at a premium or discount to the calculated NAV of the basket...often because the NAV is out-of-date by several months, since they aren't tracking and index. They usually have management fees at 0.8% to > 4%; ETFs usually have management fees < 1 %.

Mutual funds may have management fees between 0.5-2 %...and may charge a "Load" or fee from deposits to purchase shares. They also may have multiple share classes; some have a "Back-end Load" which is paid at redemption before you get your money. They also tend to limit the number of exchanges one can make/yr, because the mgr needs to sell or purchase securities to keep the fund's purpose intact...whereas the other two types of "xxF's" set up creation units of >$50K, with major commercial banks & brokerages to purchase the baskets of stocks.