Active ETFs vs Mutual Funds: What to Know Before Picking a New Fund

This Investing Insights podcast episode features an interview with Russ Kinnel, Director of Ratings for Morningstar Research Services, discussing the differences and advantages of actively managed open-end funds versus active ETFs. The conversation covers tax advantages, trading frequency, expense ratios, and the availability of ETF counterparts for existing mutual funds. Kinnel highlights that active ETFs generally offer lower costs and better tax efficiency due to the lack of capital gains distributions, although switching from an existing mutual fund to its ETF equivalent might incur additional taxes. He also analyzes the performance of T. Rowe Price and Fidelity funds and their ETF counterparts, noting variations in performance and management approaches. Listeners gain insights into the practical considerations of choosing between these investment vehicles and the potential impact of an upcoming SEC ruling that could alter the tax landscape for mutual funds.