![]() ![]() These funds also pay out dividends and allow options trading if they are ETFs. Index funds typically have a lower MER because they do not require as much active management. For example, an S&P/TSX 60 index fund will provide you with exposure to the 60 largest companies on the TSX in Canada, all in one fund. Index FundsĪs mentioned, index funds are low-maintenance, passive investments that aim to replicate the performance of the major indexes. You can think of ETFs as the broader categorization, and index funds are a sub-category of ETFs. How do ETFs and index funds overlap? A large number of index funds are actually ETFs that track the major indexes. This is the fee that is charged by the ETF provider for owning the asset. The major difference is the diversity of assets held in an ETF and that these funds also charge a fee called a Management Expense Ratio or MER. ![]() These funds hold baskets of stocks, or other assets like bonds or futures contracts, providing instant diversification to your portfolio.ĮTFs provide everything that individual stocks do, including capital gains, dividend payments, and even options trading. As their name suggests, ETFs are funds that trade on the major stock exchanges. ![]()
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