Discussion on Mutual Funds and ETFs

Module 1 Discussion: Mutual Funds and ETFs
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Module 1 Discussion: Mutual Funds and ETFs
Mutual funds and exchange-traded funds (ETFs) are investment instruments registered by the United States Securities and Exchange Commission (SEC). Individuals can save for their retirement or other forms of financial objectives. While these instruments share significant similarities, they vary in some aspects, making investors prefer one option to the other (U.S. Securities and Exchange Commission, n.d). ETFs are hybrid investments that are often managed passively. Unlike mutual funds, these securities track an index, and investors do not pick the investments. For this analysis, the mutual fund, ProFunds UltraSector Oil & Gas Fund Service (ENPSX) and the Arrow DWA Tactical: International ETF (DWCR) with a ticker, DWAT will be analyzed in terms of the top 10 holdings, previous year’s performance, and the expected dividend yield, expense ratio, and minimum investment amount and subsequently identify one advantage and one disadvantage of mutual funds and ETFs for investors.
The top 10 holdings of ENPSX, which is a mutual fund, is 67.82% of the total assets and companies include the Exxon Mobil Corp, Sociedad Hipotecaria Federal SNC IBD (0%), Chevron Corp, ConocoPhilips, Royal Bank of Canada (0%), EOG Resources Inc., Schlumberger Ltd, Marathon Petroleum Corp, Philips 66, and Cra 0.00% as at May 3, 2021. The year-to-date (YTD) return is 20.52% at present, which is a better performance compared to the version recorded on February 3, 2019, which was -56.84%. The expense ratio for the fund is 2.78%, with a dividend yield of 0.76%. The minimum initial investment amount is $15,000, although no information is provided regarding the IRA and AIP minimum in...