How do ETFs differ from mutual funds?

ETFs and mutual funds both pool investor money into a portfolio, but they differ in how you transact. Most mutual funds are bought and sold once per day at the fund's NAV, while ETFs trade throughout the day on exchanges at market prices. (finra.org)

ETFs also use a creation/redemption mechanism involving authorized participants, which can help keep prices close to NAV and can reduce certain capital gains distributions compared with many mutual funds. (sec.gov)

In practice, the better choice depends on how you invest. If you want intraday flexibility and easy portability across brokers, ETFs are convenient. If you prefer automatic investing and don't care about intraday pricing, a mutual fund can be equally effective.