What is one of the advantages of using exchange-traded funds (ETFs) compared to mutual funds?

The advantage of using exchange-traded funds (ETFs) compared to mutual funds is that ETFs trade like stocks. This characteristic allows investors to buy and sell shares of ETFs throughout the trading day at market prices, just as they would with individual stocks. This provides greater flexibility and liquidity for investors, as they can respond to market conditions in real time.

Additionally, the ability to trade anytime during market hours means that investors can take advantage of price movements and adjust their portfolios more dynamically compared to mutual funds, which are only priced at the end of the trading day. This feature can lead to more active trading strategies and potentially enhance market efficiency for those investors interested in short-term trading.

In contrast, while mutual funds typically have a structure that only allows trading once a day after market close, ETFs empower investors with immediate buying and selling capabilities within the trading day, making them more attractive for those seeking active management and real-time investment flexibility.