What is the key advantage of ETFs compared to mutual funds?

The key advantage of exchange-traded funds (ETFs) compared to mutual funds is the ability to trade throughout the day. This trait allows investors to buy and sell shares of ETFs on the stock exchange during market hours, just like individual stocks. This intraday trading capability gives investors more flexibility and the opportunity to respond to market changes quickly.

In contrast, mutual funds are priced only once at the end of each trading day, meaning that any buy or sell orders placed during the day will be executed at the net asset value (NAV) determined after the market closes. This difference offers investors using ETFs the potential for greater liquidity and better price management through real-time trading.

Regarding the other options, ETFs do not inherently guarantee returns, nor do they typically have no management fees; they generally have lower fees than mutual funds but not all management fees are eliminated. Additionally, the tax implications of ETFs can vary, and in many cases, they can be more tax-efficient than mutual funds, not higher.