Lesson ETFs 101

ETFs vs Mutual funds

Learn the similarities and important differences between ETFs and Mutual funds.

Managed investment products such as exchange-traded funds (ETFs) and mutual funds pool money from investors for the purpose of trading securities and earning a profit. In return, those funds charge a fee, known as the Management Expense Ratio (MER) for their ongoing efforts in managing and operating the fund.

For many decades, mutual funds were in the spotlight, the MVP of managed investing. Investors parked their hard-earned money in the fund, expecting to have it invested and of course, earn a profit. But as time passed by, technology advanced, and people’s expectations changed. This change opened up the doors for new players to enter the market.

The Canadian creation of the ETF

In 1990 the world's first ETF was created in Canada. Three years later we saw the first U.S. exchange-traded fund (ETF): the SPDR S&P 500, which tracks the S&P 500 index. From one fund in 1993, the combined U.S. exchange-traded products market passed $10 trillion in assets under management as of September 2024. Today, there are thousands of Canadian & U.S. listed ETFs in the market, each one serving a different purpose.

Note: The information in this blog is for educational purposes only and should not be used or construed as financial or investment advice by any individual. Information obtained from third parties is believed to be reliable, but no representations or warranty, expressed or implied, is made by Questrade, Inc., its affiliates or any other person to its accuracy.

Related lessons

Want to dive deeper?

Read next

Explore

Have more questions?

Tell us what you need help with, and we’ll get you in touch with the right specialist.

Questrade Wealth Management Inc. (QWM) and Questrade, Inc. are members of the Questrade Group of Companies. Questrade Group of Companies means Questrade Financial Group and its affiliates that provide deposit, investment, loan, securities, mortgages and other products or services. Questrade, Inc. is a registered investment dealer, a member of the Canadian Investment Regulatory Organization (CIRO) and a member of the Canadian Investor Protection Fund (CIPF), the benefits of which are limited to the activities undertaken by Questrade, Inc. QWM is not a member of CIRO or the CIPF. Questrade Wealth Management Inc. is a registered Portfolio Manager, Investment Fund Manager, and Exempt Market Dealer. Questrade, Inc. provides administrative, trade execution, custodial, and reporting services for all Questwealth accounts. 'Zero commission trades', '$0 commissions', '$0 trading', 'trade commission-free' and similar messages, refer to commission-free trading for trades placed online through Questrade, Inc.'s website or mobile apps for stocks and ETFs that are listed on a stock exchange in the United States or Canada. Other fees may still apply. © 2026, Questrade, Inc. All Rights Reserved.

Buy ETFs for free or buy ETFs commission-free: may include other fees, such as data, exchange and ECN fees. Only applies to Canadian and US listed ETFs.

Note: The information in this blog is for educational purposes only and should not be used or construed as financial, investment, or tax advice by any individual. Information obtained from third parties is believed to be reliable, but no representations or warranty, expressed or implied is made by Questrade, Inc., its affiliates or any other person to its accuracy.