While researching NISA, I came across another term I didn’t know.
“ETF (Exchange-Traded Fund)”
……Another new investment product?
I’ve just started to understand mutual funds a little bit.
There are products you can start accumulating from 100 yen, and you can invest in various companies all at once.
But what is an ETF?
“How is it different from a regular mutual fund?”
“Can I also buy ETFs starting from 100 yen?”
“If I start NISA, do I have to buy ETFs too?”
This time, I will organize these three questions as simply as possible.
To begin with, what is an ETF?
ETF stands for ‘Exchange-Traded Fund’.
……Exchange-traded?
Even though it’s a mutual fund, another difficult term has appeared.
But at first, it’s enough to think of it this way.
An ETF is a mutual fund that can be bought and sold on a stock exchange just like a stock.
Japan Exchange Group
In previous parts, I explained that a mutual fund is like a ‘mixed bag’ containing various stocks and other assets.
An ETF is also a product that allows you to hold various stocks and other assets together.
The big difference is how you buy them and how the price is determined.
First, let’s think about it in terms of grocery shopping.
For example, suppose you buy an assortment of various snacks.
With a regular mutual fund,
“Please give me 1,000 yen worth of this assortment.”
is how you can buy it.
On the other hand, an ETF is closer to buying it like this:
“Please give me one box of this assortment.”
is how you buy it.
The price of that box fluctuates based on buying and selling in the market.
Of course, this is just an analogy to help you understand the mechanism.
The important thing is the difference: regular mutual funds are easy to buy by specifying an amount, while ETFs are bought and sold in fixed quantities like stocks.
Japan Exchange Group
What is the difference between mutual funds and ETFs?
We have summarized the differences that beginners should know first.
Comparison Point
Regular Mutual Fund
ETF
How to Buy
Many products can be bought by specifying an amount, such as 100 yen.
Bought by specifying the number of units, just like stocks.
Price
In principle, determined based on the net asset value calculated once a day
Market price fluctuates during trading hours
Order Method
Specify purchase amount, number of units, etc.
Limit orders, market orders, etc.
Automatic Savings Plan
Many products are supported
Support status depends on the brokerage firm
Distributions
There are products that pay them and products that do not
There are products that pay distributions
Source: Japan Exchange Group’s ETF trading system and comparison material with mutual funds.
Japan Exchange Group
It looks a bit difficult, but it is okay if you do not memorize everything right now.
A particularly major difference is whether you decide ‘how much money to buy’ or ‘how many units to buy’.
Can you also buy ETFs starting from 100 yen?
This is a point of concern for those considering small-amount investments.
With regular mutual funds, depending on the brokerage firm and the product, you can save from 100 yen every month.
So, what about ETFs?
For ETFs, the trading unit is determined for each product.
Japan Exchange Group
For example, suppose there is an ETF like the following.
If the price of the ETF is 2,000 yen per unit
Product that can be bought from 1 unit
Approximately 2,000 yen
Product in units of 10
Approximately 20,000 yen
This is a hypothetical example for explanation. The actual purchase amount varies depending on market price, trading units, fees, etc.
In other words, the amount required for an ETF differs depending on the product.
While there are ETFs that can be bought from 1 unit, not all ETFs can be bought for 100 yen.
“I want to start with 100 yen, 500 yen, or 1,000 yen every month”
In such cases, there is a difference in that regular mutual funds often make it easier to specify the amount.
ETF prices move just like stocks
This is also a major feature.
For regular mutual funds, the purchase price is determined based on the “net asset value” which is calculated once a day in principle.
Therefore, at the time of placing an order, you may not know exactly how much you will be able to purchase it for.
On the other hand, ETFs can be ordered while watching the market price during trading hours, just like stocks.
Japan Exchange Group
For example,
It’s about 2,000 yen per share right now.
I’d like to buy it if it drops to 1,950 yen.
There are order methods like that as well.
However, you are not guaranteed to be able to buy at your desired price.
For now, it is enough to remember that ETFs can be bought and sold while watching the price, just like stocks.
Are there products like the S&P 500 or All Country in ETFs too?
Yes, there are.
This part is a bit complicated, but please recall Episode 10.
The S&P 500 is an index that tracks the price movements of about 500 representative American companies.
All Country is generally used as the name for mutual funds that invest in global stocks.
There are also ETFs that aim to track indices like the S&P 500 or global stocks.
Japan Exchange Group
In other words, even if the goal of investing broadly in American stocks is the same,
there are ways to buy them as regular mutual funds and ways to buy them as ETFs.
Even if the investment targets are similar, the product structure and buying methods can differ.
Understanding just this much is enough for now.
Can you also receive dividends with ETFs?
There are ETFs that pay out distributions.
For example, ETFs that invest in stocks may pay distributions to investors based on dividends received from the stocks they hold.
However, not all ETFs necessarily pay out distributions.
The amount and timing of payments vary by product, and there are cases where distributions may be zero.
Japan Exchange Group
Also, among regular mutual funds, there are products that pay out distributions and products that continue to operate without making distributions.
It is important not to misunderstand that ‘if it is an ETF, money will definitely be deposited’.
We will organize the details regarding dividends and distributions in the next episode, Part 15.
Are ETFs cheaper in terms of fees?
Some ETFs have lower management and administration fees while held compared to regular mutual funds.
However, it is not necessarily true that ‘all ETFs are cheap’.
There are also low-cost mutual funds, and for ETFs, you also need to check trading commissions and the spread between the market buy and sell prices.
Japan Exchange Group
For example, when purchasing small amounts every month, depending on the trading costs and the minimum purchase amount, it may be difficult to buy in the way you had planned.
For now,
‘Since both have different costs depending on the product, check before buying’
is all you need to remember.
Can I buy ETFs in NISA?
Yes. You can purchase ETFs that are eligible for NISA.
ETFs can mainly be purchased in the Growth Investment Quota, but ETFs that meet certain conditions are also eligible for the Tsumitate Investment Quota.
Financial Services Agency
However, not all ETFs can be bought through NISA.
Also, you need to check if the brokerage firm you use handles that specific ETF.
What beginners should keep in mind here is,
“You don’t have to buy ETFs just because you started NISA.”
That is the point.
There is also a way to accumulate only regular mutual funds in the installment investment quota.
You can use NISA without buying ETFs.
If it were me, I wouldn’t try to learn everything at once.
Before you start investing, many unfamiliar terms will come up.
NISA.
Mutual funds.
S&P 500.
All Country (Orkan).
Individual stocks.
ETF.
…Another new term.
But I don’t think you need to understand everything before you start investing.
I wasn’t knowledgeable from the beginning either.
When you come across a term you don’t understand, look it up.
Actually take a look at the products.
When you come across something you don’t understand again, look it up.
It was a process of repeating that.
Once again,
If you understand that “ETFs are mutual funds that can be bought and sold like stocks,”
that is enough for now.
Summary of this session
ETF stands for “Exchange Traded Fund” in Japanese.
They are mutual funds that can be bought and sold on a stock exchange, just like stocks.
While many regular mutual funds allow you to purchase them by specifying a small amount, such as 100 yen, ETFs are purchased in trading units determined for each product.
Also, ETF prices fluctuate during trading hours, and some products pay out dividends.
You can also purchase ETFs through NISA if they are eligible.
However, the most important thing I want to convey this time is,
just because you didn’t know about ETFs, it doesn’t mean your previous studies on NISA and mutual funds have been a waste.
that is the point.
You don’t have to buy everything every time a new term comes up.
I think it’s best to increase your knowledge little by little and think within the scope of what you can understand.
Mini Glossary for this session
ETF (Exchange Traded Fund)
A mutual fund that can be bought and sold on a stock exchange, just like stocks.
Listing (Jojo)
The state in which stocks, ETFs, etc., are available for trading on a stock exchange.
Unit (Kuchi)
A unit used to count the quantity of ETFs, mutual funds, etc. For ETFs, it is used as ‘1 unit’ or ’10 units’.
Trading unit
A rule regarding how many shares or units of stocks or ETFs are traded at one time.
Net Asset Value (NAV)
The amount that serves as the standard when considering the price of a mutual fund. In principle, it is calculated once a day.
Limit order
An order placed by specifying a desired price, such as ‘I want to buy if it is at or below this price’.
Distribution payment
Money that may be paid from a mutual fund or ETF to the person holding it.
Trust fee
The cost for operation and management incurred while holding a mutual fund or ETF.
Next time
Investing from an Ordinary Household Budget Part 15
I want to try buying one share of stock.
I’ve also started to understand mutual funds a little.
But in the first place, if I buy stocks or mutual funds, how does the money actually grow?
Next time,
the difference between ‘capital gains’ and ‘dividends/distribution payments’
will be explained simply from the perspective of an ordinary household budget.
*This article is based on my own experience and information available as of September 2026, summarized to be easy to understand for those who have not yet started investing. It does not recommend any specific brokerage firm, product, investment method, or stock. Investments carry the risk of loss of principal. Please do not invest money needed for living expenses or money you plan to use soon; consider investing only within the scope that fits your own household budget. Since the purchase conditions, fees, and NISA eligibility for ETFs and mutual funds may change, please check the latest information from the Financial Services Agency or each financial institution when actually using them.