[Music] hi my name is soil Ahmed I'm the author of caa.com in this presentation I'll be explaining to you the difference between mutual funds and exchange traded funds so what are mutual funds and ETFs let's have a look at what mutual funds are are first they're basically an investment vehicle that is essentially a pool of capital from a group of individuals mutual funds are controlled by an individual known as the fund manager who invests the funds that the individuals have given to him within the financial markets so how does it actually work an individual investor invests in a mutual fund together with a large group of of other investors the investment from the group will be controlled by the fund manager what the manager invests the funds in is only at the manager's own discretion so the actual individual investor will never really know how the mutual fund is managing their money except at the end of the quarter when they will receive a statement or a summary of the Holdings at the end of the quarter at that particular time now let's compare that with ETFs or exchange traded funds exchang traded funds are like mutual funds except that they usually track an index of either commodity or basket of assets like an index fund but more importantly ETFs trade on a stock exchange whereas mutual funds do not and ETFs can be bought and sold like normal shares during the market today unlike a mutual fund which can only be bought or sold at the end of a day how does it actually work so an individual investor invests a large amount into an ETF the ETF invested follows the specific index for example the dollar or a group of indices and the profit generated by the ETF is directly related to the underlying asset and the underlying asset is usually fixed and therefore as an individual investor you know exactly where the ETF is investing at any given time furthermore ETFs have usually a very low management fee often a fraction of the fee you would pay a mutual fund manager so this is a basic difference between a mutual fund and an exchang traded fund