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If you think the growth in mutual funds has been impressive, then Fisher Investments thinks the growth in exchange-traded funds will really blow you away. ETFs are a much newer vehicle than mutual funds. The first US mutual fund was introduced way back in the 1920s, but ETFs didn’t come on the scene in the US until 1993. There are now over 600 ETFs here, holding over $600 billion in assets.* This is a drop in the bucket compared to the amount invested in mutual funds, but if the ETF market continues growing at its current pace, ETFs will catch up before long. Since 2000, ETF investments have grown by over 37 percent per year. And the number of ETFs available has grown by 70 percent annually!** ETFs and mutual funds are alike in many ways, but they have some important differences. Fisher Investments feels the most striking is how they trade. Mutual funds are bought and sold once at the end of the trading day, whereas ETFs trade throughout the day, just like regular stocks. ETFs share some similarities with both open- and closed-end mutual funds. Their prices aren’t directly determined by the NAV of the fund’s holdings, but they have a unique feature that keeps the price from straying too far from NAV.
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