Investing glossary
ETF vs investment fund
An ETF trades on an exchange and is bought or sold in real time like a share; an investment fund (FI) is subscribed or redeemed once a day at its net asset value.
The most important practical difference for a Spanish investor is tax-related: investment funds allow switching between funds without being taxed on the gain, while selling an ETF to buy another does trigger a taxable capital gain or loss immediately.
In exchange, ETFs usually have somewhat lower TERs and a wider variety of very specific products (sector, thematic), and can be bought and sold at any time while the market is open.