【summary】
Both ETFs and mutual funds are products that can be used for diversified investing.
For beginners to start saving with a new NISA, investment trusts are often easier to use.
On the other hand, ETFs are also an option for people who want to buy and sell in real time as listed products or who want to receive dividends.
| Comparison items | ETF | Investment trust |
|---|---|---|
| Buying and selling | Buying and selling on the stock market | Standard price once a day |
| Savings | Supported by securities companies | Easy to save automatically |
| Dividends | Many products available | Easy to choose reinvestment type |
| Fees | Beware of buying and selling fees | Beware of trust fees |
| Suitable for beginners | Requires some getting used to | Easy to start |
Choose one based on how it will be used, not which one is better.
Neither ETFs nor mutual funds are principal guaranteed. It is affected by price movements of stocks, bonds, REITs, overseas assets, etc., exchange rates, fees, liquidity, and taxation. This article is not intended to recommend any particular product, but rather to organize your perspective when making comparisons.
What is ETF?
An ETF is an investment trust listed on a stock exchange.
They can be bought and sold on the market like stocks.
| Features | Contents |
|---|---|
| Listing | Real-time buying and selling on the market |
| Price | Fluctuations during trading hours |
| Distribution | Paid by product |
| Transaction unit | Determined by product |
ETFs are suitable for people who want to buy and sell by looking at prices themselves.
What is an investment trust?
Investment trusts are products in which professionals manage money collected from many investors.
As a general rule, purchases and sales are made at a standard price that is determined once a day.
| Features | Contents |
|---|---|
| Savings | If possible from a small amount such as 100 yen per month |
| Automation | Easy to save every month |
| Reinvestment | Easy to choose dividend reinvestment |
| Number of products | Many products eligible for new NISA |
The new NISA investment limit covers certain products that are suitable for long-term, accumulation, and diversification.
Difference in fees
Fees differ between ETFs and mutual funds.
| Fees | ETF | Investment Trust |
|---|---|---|
| Buying and selling fees | May be charged | Many products have zero fees at the time of purchase |
| Trust fees | Many low-cost products | Low-cost products are increasing |
| Foreign exchange fees | Be careful with foreign ETFs | Difficult to be aware of with yen-denominated investment trusts |
Costs vary by product, so it cannot be said that because an ETF is cheap, it is expensive because it is an investment trust.
Check the actual trust fees and buying and selling costs.
In the case of overseas ETFs, real costs include not only buying and selling fees, but also exchange fees, foreign taxes, and yen conversion timing. Even for domestic investment trusts, trust fees, hidden real costs, and the presence or absence of trust asset retention vary by product.
Difference in distribution amount
There are many ETF products that pay dividends.
Some investment trusts reinvest internally without paying out any dividends.
| Policy | Suitable products |
|---|---|
| Want to increase your assets | Investment trusts that do not pay out dividends |
| I want to receive regularly | ETF with dividends |
| Want to reduce taxes | Consider holding within the new NISA |
If you want to build assets over the long term, it is easier to take advantage of compound interest by reinvesting rather than receiving dividends.
Dividends are not necessarily proof that profits have increased. After distribution, it will be reflected in the standard price and market price, so it is better not to judge the advantages or disadvantages only based on the amount received.
Which is better for beginners?
For beginners who want to save money every month, investment trusts are often easier to use.
| Why investment trusts are suitable for beginners | Contents |
|---|---|
| Easy to save a small amount | If possible from 100 yen or 1,000 yen per month |
| Easy to automate | Monthly purchases can be set |
| Easy to reinvest | Difficult to worry about dividends |
| Don't look at prices too much | Easy to avoid short-term buying and selling |
ETFs are not bad products.
However, since they buy and sell based on price, beginners may be too concerned about timing.
summary
Both ETFs and mutual funds are products that can be used for diversified investing.
Investment trusts are suitable for beginners who want to automate monthly savings, while ETFs are suitable for those who emphasize real-time buying and selling and dividends.
If you want to build long-term assets using the new NISA, it will be easier to manage if you start by focusing on low-cost investment trusts.
In the end, the decision is not based on the product name, but on the investment target, cost, distribution policy, buying and selling method, and whether you can hold the stock even when the stock goes down.