ETFs and managed funds: what is different?

The labels overlap

An ETF is actually a type of managed fund. The main practical difference is often how you buy and sell units. ETFs usually trade on an exchange, while other managed funds may be bought through the provider or a platform. Either type can track an index or be actively managed.

What to compare

Compare underlying holdings, management costs, buy and sell costs, access to cash, minimum investment amounts, administration, tax and how distributions work. An ETF ticker does not tell you all of this.

Compare the experience, not just the name

With an ETF, you generally place an order through an exchange during trading hours, and the market price can differ slightly from the fund's underlying asset value. An unlisted managed fund generally processes applications and redemptions through the provider or platform, often at a price calculated using the fund's valuation rules rather than a live stock-exchange quote.

Both can hold the same kinds of assets, and either can follow an index or use active management. One structure isn't automatically cheaper or better diversified.

Try a like-for-like comparison

1. Choose an ETF and an unlisted managed fund with similar investment objectives.
2. Compare what they hold, ongoing fees, minimum investment and any transaction charges.
3. Check how buying, selling and withdrawing money works, including processing times.
4. Read the current documents for taxes, distributions and risks.

If you're new, focus first on the investments inside the fund. How you access them matters, but it shouldn't be the only thing deciding what you own.