Our Blog

Common Investing Questions -Definitions

You aren’t learning if you are not asking questions. We have found most people are afraid to ask us common investing questions. One question we receive often is, what differentiates Mutual Funds, Exchange Traded Funds (ETFs), and Hedge Funds?


A Mutual Fund is a company. That’s the best way to think about it. That company owns securities, such as stocks, bonds, etc. You buy into shares of that company when you purchase shares of the mutual fund. If you want to buy or sell shares, that is done at the close of the investment day. There are management fees to the management of the “company” and tax considerations.

Exchange Traded Funds (ETF) are a basket of securities meant to mimic the returns of a specific index. For example, maybe in your strategy, you want to own some of the S&P 500. Rather than go and figure out a way to buy all 500 stocks in that index, you could purchase an S&P 500 ETF. That ETF will attempt to mimic the price movement of the S&P 500, but you won’t own 500 stocks. ETFs are traded like stocks throughout the day. The expenses tend to be lower than mutual funds, but the fund is often not actively managed. However, it can be, but that does typically add to the fee.

Finally, a Hedge Fund is one you often hear about in the news that the ultra-wealthy invest in. Hedge Funds are always actively managed. The idea behind them is that they are trying to hedge against risk while capturing maximum upside. They often invest in things outside of stocks and bonds. Hedge Funds tend to come with a huge cost, which is why not everyone invests in them.

There is a lot more to each of these definitions, but hopefully, this helps answer some questions you had. If you are uncertain on any of these terms or have other investment questions –please contact us to schedule a meeting. (503)257-0057 | info@stangierwealth.com

If you are new to investing or want to refreshing your knowledge, we recommend registering for one our financial education webinars. Our classes are free and hosted via Zoom. The classes are designed to be small groups so there is time for questions.

Visit our class schedule to register here


DISCLOSURE: Investment advisory services are offered through Gretchen Stangier, Inc. DBA Stangier Wealth Management (“Stangier Wealth Management”), an investment advisor registered with the U.S. Securities and Exchange Commission. Stangier Wealth Management only offers investment advisory services where it is appropriately registered or exempt from registration and only after clients have entered into an investment advisory agreement confirming the terms of engagement and have been provided copies of the firm’s ADV Part 2A brochure and Part 3 documents.

DISCLAIMER: This website is for informational purposes only and does not constitute a complete description of our investment services or performance. This website is in no way a solicitation or offer to sell securities or investment advisory services except, where applicable, in states where we are registered or where an exemption or exclusion from such registration exists. Information throughout this site, whether stock quotes, charts, articles, or any other statement or statements regarding market or other financial information, is obtained from sources which we, and our suppliers believe reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. Nothing on this website should be interpreted to state or imply that past results are an indication of future performance. THERE ARE NO WARRANTIES, EXPRESSED OR IMPLIED, AS TO ACCURACY, COMPLETENESS, OR RESULTS OBTAINED FROM ANY INFORMATION POSTED ON THIS OR ANY ‘LINKED’ WEBSITE.

You may also like

How Your Savings Account Can Become Your Retirement Redeemer

Many news stories and advisors lately seem to focus investment strategies as a surefire way for people to gain extra…

The Solar Cycle and Economic Cycles

According to NASA, the sun’s current cycle, known as Solar Cycle 24, is expected to reach its peak in early-…

Eating the Estate Planning Elephant… One Bite at a Time, Part I

No one wants to look at it, no one even wants to think about it, yet there it looms —…