Second, investors in iShares, like those in common stocks, pay tax primarily on the investment's appreciation at the time of sale. Retail index mutual funds that are managed to keep portfolio turnover low offer similar advantages. Commission costs continue to fall with increased competition and the growth of online investing. Some traditional mutual funds charge a transaction fee for buying or selling shares. The total fees an investor pays could exceed the cost of the commission of buying or selling iShares.
Investors can make adjustments at any time without short-term restrictions or redemption fees.
A brokerage commission is charged on the sale. Fund companies offering traditional mutual funds may have short-term redemption policies that impose restrictions on the sale of shares within a given time period after the purchase date. This can include a short-term redemption fee. Instead, they deposit the income in a non-interest bearing account and distribute it periodically to the trust shareholders. Investors can margin iShares.