All of the following statements are true for mutual funds (MF) and exchange traded funds (ETF) except: They both include a basket of securities that allows for diversification Their prices are set by market forces and they are traded on an exchange O ETFs are passively managed while MF can be passively or actively managed Both ETFs and MFs are best for those that make infrequent transactions and avoid trading fees. ETFs invest in securities that track an index or sector while MF can track an index or be actively managed.