There is a big change to this month’s issue.

Since 2010, every issue of the February AAII Journal has been devoted to our annual mutual fund guide. This issue is no different. But, coinciding with the 40th anniversary of our mutual fund guide, we’ve added our annual ETF guide.

Over the years, we’ve had requests by members to publish the mutual fund and ETF guides at the same time. These members wanted the ability to do cross comparisons. Since both mutual funds and exchange-traded funds (ETFs) can be used interchangeably in brokerage accounts or within the context of an overall portfolio, it makes sense to consider both types of funds.

We were able to facilitate this request by working with Morningstar on the data they provide us. Without getting into too many details, we switched to a monthly frequency of processing the data on both types of funds. This change required altering the categories used to classify each fund but allowed us to create new tools and features.

Many of you have taken advantage of them over the past 12 months or so. These tools include our mutual fund and ETF evaluators, comparison tools (helpful for making a decision between two or more funds) and online guides (which are now updated monthly). In the AAII Journal, we’ve introduced several Mutual Fund and ETF First Cut screens.

We also built mutual fund and ETF screeners that are accessible to  A+ Investor  subscribers. We used these screeners last year for our Quarterly Mutual Fund and ETF Updates, which are published in the May, August and November AAII Journal. We used these screeners for the guides you will see in this month’s issue as well.

To facilitate the change in this issue, we opted for a new design in the print and PDF guides. Fund listings are now presented on a single page instead of the previous two-page spread. Doing so allowed us to cover many more funds in both guides. You’ll find approximately 400 mutual funds and a similar number of ETFs.

There’s much more on AAII.com. Information on more than 24,000 mutual funds and 2,400 ETFs can be accessed in the respective online guides. There is also more data, including portfolio composition and tax-cost ratios. You can download the data to an Excel spreadsheet for further analysis. These online guides are included in your AAII membership.

One question may pop up from this: Should you use a mutual fund or an ETF? It’s a question I’ve been asked many times over the years. I address this here, but I’ll provide a shorter version of the answer here. For the most part, you should pick the fund that best fulfills your needs regardless of its format.

There are considerations that may influence your decision. One is the type of account you are using. Workplace retirement accounts—such as 401(k) or 403(b) plans—are typically restricted to mutual funds. Robo-advisers mostly use ETFs. Another is tax considerations. ETFs tend to have the lowest tax-cost ratios, though some mutual funds are very tax-efficient. If you are dollar-cost averaging, mutual funds may be advantageous. Fidelity has the ability to buy fractional shares of ETFs, as do some of the app-based brokers. If the ability to trade on an intraday basis is important to you, ETFs are preferable.

Whichever fund you choose, make sure you understand what it is designed to do. Just like you shouldn’t judge a book by its cover, neither should you judge a mutual fund or ETF by its name. The fund may follow a different strategy than you expect. Look at the fact sheet and the prospectus. If it tracks an index, look at what the index is designed to do. Also, pay attention to the portfolio. What securities does it hold? How concentrated is the portfolio? Does the fund invest in securities from foreign countries and, if so, which ones?

Most importantly, if you don’t understand what the mutual fund’s or ETF’s strategy is, then it probably isn’t the right one for you.

Throughout this issue, you’ll see references to the tools available on AAII.com. They are among the benefits you get by being an AAII member, and we want you to take advantage of them. If you are reading this issue in print, consider switching to reading it online. New issues are available at AAII.com around the first of every month, so you won’t have to wait on the postal service. Plus, you’ll help the environment by switching to digital-only delivery. Log into AAII.com, click on your name and then click on My Account. You’ll see the button to opt out (of print delivery) next to AAII Journal under My Subscriptions.

Wishing you prosperity and good health,