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Mutual funds have been around for over a hundred years, but ETFs, they are quickly closing the gap fast. And on today’s Stocks and Translation, we stack them head-to-head so that you can pick what’s right for your portfolio. Let’s start with some simple definitions here. An exchange traded fund, or ETF, trades all day like a stock, but usually holds a small or a big basket of assets. Although some modern ones only hold a single stock. In plain English, most ETFs are passive strategies that you can buy or hold any second that the market is open. Now, with the mutual fund on the other hand, you have pooled money that might be actively or passively managed, and it’s priced only after the closing bell each day. So each, in other words, you have only one shot per day to get in or out. Now, let’s take a look at how these two classes of funds stack up against each other. We just talked about liquidity, and that’s when you can trade. ETFs trade all day long, and mutual funds only trade once per day after the close. When it comes to taxes though, mutual funds can surprise you with the year end tax bill if they’ve sold some of their stock. So you need to do your research. ETFs on the other hand, use something called in-kind swaps to keep capital gains taxes to a minimum. But ETFs can be structured in different ways. So you got to do your research there, too. And now let’s talk transparency. Mutual funds have to report what they own each quarter, that’s only once per quarter. And they often play shell games to make sure that what they own looks good to investors as of the last day of the reporting period. ETFs on the other hand, generally disclose their holdings on a daily basis, published the evening of the close or the following morning. And when it comes to costs, ETFs usually charge lower management fees, but that’s also in part because they tend to passively track an index. For actively managed ETFs like the ARK Innovation fund, fees tend to be higher. And that also tends to be the case with leverage ETFs using derivatives, and those that track exotic assets like commodities, gold and oil, for example. Now, mutual funds also have to have a minimum buy-in of about $1,000, whereas you only have to lay out the money to buy one share of an ETF, which is usually much lower. And ETFs are very stock-like. So you can buy or sell options based on them, or even sell them short. Mutual funds just don’t have that flexibility. Now, we already talked about management fees, but when it comes to actual trading costs, mutual funds might slap on a front end or a back end fee called a load. If they don’t have it, it’s called a no-load fund. And if you’re buying an ETF much like a stock, you just have to worry about the bid-ask spread plus any commissions that might be charged by your broker. So a quick recap here. Mutual funds win for automatic savings plans and ETFs win in most other places. Now, let’s check out a couple of charts that show how these two asset classes of funds have grown over the last four decades. Mutual funds, they got their start in the mid 1920s, but they exploded in the 1980s. And as you can see by the top white line that shows the number of mutual funds, it’s been going sideways since the beginning of the century, with over six and a half thousand currently. And that’s down over a thousand from the pre-pandemic peak. Meanwhile, the pace of ETF growth has only increased in recent years, with the current total nearing 4,000. And when it comes to assets under management, mutual funds in white up top here have about $22 trillion, which is also the peak from a few years ago. And ETFs and green, they keep rocketing higher now standing at about half of that or $11 trillion. The money is moving where the flex is. So the bottom line, if you want speed, tax efficiency and low fees, ETFs are the toolbox. And if you like set and forget it, and automatic rebalance, mutual funds, they still have a place, but always know the rules before you pull the trigger. And stay tuned for part two of Stocks and Translation. We are pitting two OG ETFs, SPY and QQQ, against each other. How Spiderwoman helped build the first ETF, and how the Qs turn into the biggest fee machine ever, a piece Invesco now wants back. Don’t miss it. And also tune into Stocks and Translation podcast for more jargon busting deep dives. New episodes can be found Tuesday and Thursday on Yahoo! Finance’s website or wherever you find your podcasts.