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Joe Jaspers, CFP®
Vice President, Wealth Management
Carolinas Telco Capital Advisors
Located at Carolinas Telco FCU
9813 South Blvd, Suite 101
Charlotte, NC 28273
Phone: 704-391-5600
Toll Free: 800-622-5305, ext. 2608
Fax: 704-556-1652
Email: joe.jaspers@lpl.com
May/June 2020
Bigger Baskets
Buying shares of mutual funds* generally gives investors a way to own a piece of many securities, offering some diversification** most people could not afford if they were to buy the same securities individually. Two popular investments that aim to achieve this diversity at a reasonable price are index-based mutual funds and exchange-traded funds (ETFs). While they have some similarities, there are some important differences.
Similarities
Index-based mutual funds and ETFs are passive investments. They both seek to track underlying securities’ indexes and replicate their respective returns, generally with lower fees than actively managed funds.Both types of pooled investment vehicles generally have lower fees than non-indexed mutual funds, but charge a small fee known as the expense ratio. ETFs that mimic the major indexes may have lower fees than index funds.
Differences
ETFs are not mutual funds but investments registered with the Securities and Exchange Commission (SEC). While index fund shares can only be bought or sold at the end of each trading day, ETF shares are traded throughout the day. This means index fund prices change only after trading hours. ETF prices change more frequently and, because they are traded throughout the day, they are potentially more liquid.Investment minimums also may vary between the two. Use caution, however, as some ETFs may trigger trading commissions.
Get Help
While these descriptions are generalized, some ETFs can be very specialized with a small niche focus and higher fees, making them more difficult to trade and more expensive. Talk to a financial professional to learn more.*Investors should consider the investment objectives, risks, charges and expenses of the fund carefully before investing. Contact the issuing firm to obtain a prospectus which should be read carefully before investing or sending money. Because mutual fund values fluctuate, redeemed shares may be worth more or less than their original value. Past performance won’t guarantee future results. An investment in mutual funds may result in the loss of principal.
**Diversification cannot eliminate the risk of investment losses. Past performance won’t guarantee future results. An investment in stocks or mutual funds can result in a loss of principal.
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Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. Carolinas Telco FCU and Carolinas Telco Capital Advisors are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using Carolinas Telco Capital Advisors, and may also be employees of Carolinas Telco FCU. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of, Carolinas Telco FCU or Carolinas Telco Capital Advisors. Securities and insurance offered through LPL or its affiliates are:
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