There are a number of differences between ETFs and mutual funds, including performance, trading constraints, fund fees, and taxes. Here, we'll break down the details so that you can understand your portfolio. Performance An exchange-traded fund (ETF) is a security that generally tracks a broad-market stock or bond index, or a basket of assets—just like a mutual fund—but trades like a stock on a listed exchange. By design, index ETFs closely track their benchmarks, such as the S&P 500 or the ...