Compare ETF vs. mutual fund minimums, pricing, risk, management, and costs, then weigh the pros and cons.
How to invest

ETFs vs. mutual funds: A comparison

You may be surprised by how similar ETFs and mutual funds are. Just a few key differences set them apart.

Similarities between ETFs & mutual funds

The biggest similarity between ETFs (exchange-traded funds) and mutual funds is that they both represent professionally managed collections (or "baskets") of individual stocks or bonds.

More traits that ETFs & mutual funds have in common

ETFs and mutual funds both come with built-in diversification.

One fund could include tens, hundreds, or even thousands of individual stocks or bonds in a single fund. So if 1 stock or bond is doing poorly, there's a chance that another is doing well. That could help reduce your risk—and your overall losses.

See how ETFs also help cut your costs

ETFs and mutual funds both give you access to a wide variety of U.S. and international stocks and bonds. You can invest broadly (for example, a total market fund) or narrowly (for example, a high-dividend stock fund or a sector fund)—or anywhere in between. It all depends on your personal goals and investing style.

At Vanguard, we offer more than 75 ETFs and 160 mutual funds.

ETFs and mutual funds are managed by experts. Those experts choose and monitor the stocks or bonds the funds invest in, saving you time and effort.

Although most ETFs—and many mutual funds—are index funds, the portfolio managers are still there to make sure the funds don’t stray from their target indexes.

How a fund manager is different from a personal financial advisor

All ETFs and Vanguard mutual funds can be bought and sold online in your Vanguard Brokerage Account without paying any commission—ever.*

Differences between ETFs & mutual funds

If you prefer lower investment minimums …

ETFs

An ETF could be more suitable for you.

You can buy an ETF for the price of 1 share—commonly referred to as the ETF's market price. Depending on the ETF, that price could be as little as $50 or as much as a few hundred dollars.

Estimate the total price of your ETF trade

Check current prices for all Vanguard ETFs®


Mutual funds

A mutual fund may not be a suitable investment.

Mutual fund minimum initial investments aren't based on the fund's share price. Instead, they're a flat dollar amount.

Most Vanguard mutual funds have a $3,000 minimum.** That would buy you 30 shares of a hypothetical fund with a net asset value (NAV) of $100 per share.


If you want more hands-on control over the price of your trade…

ETFs

An ETF could be a suitable investment.

Not only do ETFs provide real-time pricing, but they also let you use more sophisticated order types that give you the most control over your price.

If you want to keep things simple, that's OK! Just stick with a market order. It'll get you the best current price without the added complexity.


Mutual funds

A mutual fund may not be a suitable investment.

Regardless of what time of day you place your order, you'll get the same price as everyone else who bought and sold that day. That price isn't calculated until after the trading day is over.


If you want to repeat specific transactions automatically…

ETFs

An ETF may not be a suitable investment.

You can't make automatic investments or withdrawals into or out of ETFs.


Mutual funds

A mutual fund could be a suitable investment.

You can set up automatic investments and withdrawals into and out of mutual funds based on your preferences.


If you're looking for an index fund…

ETFs

An ETF could be a suitable investment.

Most ETFs are index funds (sometimes referred to as "passive" investments), including our lineup of nearly 70 Vanguard index ETFs.


Mutual funds

A mutual fund could also be a suitable investment.

We also offer more than 65 Vanguard index mutual funds.

Compare index funds vs. actively managed funds

Learn how an active fund manager compares with a personal advisor

Differences between ETFs & mutual funds

  ETFs Mutual funds

If you prefer lower investment minimums …

An ETF could be more suitable for you.

You can buy an ETF for the price of 1 share—commonly referred to as the ETF's market price. Depending on the ETF, that price could be as little as $50 or as much as a few hundred dollars.

Estimate the total price of your ETF trade

Check current prices for all Vanguard ETFs®

A mutual fund may not be a suitable investment.

Mutual fund minimum initial investments aren't based on the fund's share price. Instead, they're a flat dollar amount.

Most Vanguard mutual funds have a $3,000 minimum.** That would buy you 30 shares of a hypothetical fund with a net asset value (NAV) of $100 per share.

If you want more hands-on control over the price of your trade…

An ETF could be a suitable investment.

Not only do ETFs provide real-time pricing, but they also let you use more sophisticated order types that give you the most control over your price.

If you want to keep things simple, that's OK! Just stick with a market order. It'll get you the best current price without the added complexity.

A mutual fund may not be a suitable investment.

Regardless of what time of day you place your order, you'll get the same price as everyone else who bought and sold that day. That price isn't calculated until after the trading day is over.

If you want to repeat specific transactions automatically…

An ETF may not be a suitable investment.

You can't make automatic investments or withdrawals into or out of ETFs.

A mutual fund could be a suitable investment.

You can set up automatic investments and withdrawals into and out of mutual funds based on your preferences.

If you're looking for an index fund…

An ETF could be a suitable investment.

Most ETFs are index funds (sometimes referred to as "passive" investments), including our lineup of nearly 70 Vanguard index ETFs.

A mutual fund could also be a suitable investment.

We also offer more than 65 Vanguard index mutual funds.

Compare index funds vs. actively managed funds

Learn how an active fund manager compares with a personal advisor

Whether you prefer ETFs or mutual funds (or both!), be sure to check out:

Our list of ETFs

You're ready to decide which mutual funds you want to invest in.

View Vanguard ETFs

Our list of mutual funds

You're ready to decide which mutual funds you want to invest in.

View Vanguard mutual funds

Our tools: Find an asset allocation that best fits you

You're ready to decide which mutual funds you want to invest in.

Take our investor questionnaire to find the right balance of stocks and bonds for your portfolio based on your goals and risk tolerance. You can also view how 9 model portfolios have performed in the past

TRAITS WE HAVEN'T COMPARED YET

What about comparing ETFs vs. mutual funds when it comes to performance? Risk? Expense ratios? Taxes?

Comparing these and other characteristics makes good investing sense. But unfortunately, it's not as easy as categorically comparing "all ETFs" to "all mutual funds."

For example, if you compare a stock ETF with a bond mutual fund, the ETF-vs.-mutual-fund comparison isn't as important. What matters is that each invests in something completely different and, therefore, behaves differently.

Instead, compare 1 specific fund with another.

 

Compare up to 5 specific ETFs or mutual funds

 

For more information about Vanguard funds or ETFs, visit vanguard.com to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.

*Commission-free trading of Vanguard ETFs applies to trades placed both online and by phone. Commission-free trading of non-Vanguard ETFs excludes leveraged and inverse ETFs and applies only to trades placed online; most clients will pay a commission to buy or sell non-Vanguard ETFs by phone. It also excludes leveraged and inverse ETFs, which can't be purchased through Vanguard but can be sold with a commission. Commission-free trading of non-Vanguard ETFs also excludes 401(k) participants using the Self-Directed Brokerage Option; see your plan’s current commission schedule. Vanguard Brokerage reserves the right to change the non-Vanguard ETFs included in these offers at any time. All ETFs are subject to management fees and expenses; refer to each ETF's prospectus for more information. Account service fees may also apply. All ETF sales are subject to a securities transaction fee. See the Vanguard Brokerage Services® commission and fee schedules for full details.

**Vanguard Target Retirement Funds and Vanguard STAR® Fund have a $1,000 minimum. Most other Vanguard funds have a $3,000 minimum. Some Vanguard funds have higher minimums to protect the funds from short-term trading activity. Fund-specific details are provided in each fund profile.

You must buy and sell Vanguard ETF Shares through Vanguard Brokerage Services (we offer them commission-free) or through another broker (which may charge commissions). See the Vanguard Brokerage Services commission and fee schedules for limits. Vanguard ETF Shares are not redeemable directly with the issuing fund other than in very large aggregations worth millions of dollars. ETFs are subject to market volatility. When buying or selling an ETF, you will pay or receive the current market price, which may be more or less than net asset value.

All investing is subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss.