What is the primary difference in how mutual funds and ETFs are priced and traded in Canada?

• A. Mutual funds are bought and sold at end-of-day net asset value (NAV); ETFs trade on an exchange and can be bought or sold throughout the trading day at market prices.
• B. ETFs are bought and sold at end-of-day NAV; mutual funds trade on an exchange intraday.
• C. Mutual funds and ETFs both trade intraday on an exchange, with mutual funds priced by the bid-ask spread.
• D. Mutual funds are priced by the regulator weekly; ETFs daily.

Answer: (A)

The essential distinction is how the price is set and when you can trade. Mutual funds in Canada are not bought or sold on an exchange; you place a buy or sell request with the fund company and the price is the net asset value per share calculated once at the end of the trading day. Orders placed during the day are filled at that closing NAV — this is called forward pricing.

ETFs, on the other hand, are listed and traded on a stock exchange. They have real-time prices driven by supply and demand throughout the trading day, so you can buy or sell at market prices whenever the market is open. Those intraday prices can differ from the fund’s actual NAV, but arbitrage processes help keep them in line.

So, the main difference is mutual funds are priced and traded at end-of-day NAV through the fund company, while ETFs are priced and traded intraday on an exchange at market prices.