This paper expands the debate on “Exchange Traded Funds vs. Traditional Mutual
Funds” using for the first time data from the emerging Greek ETF market. In
particular, trading and business data of the first ETF launched in Greek market,
namely the ALPHA ETF FTSE ATHEX 20 are employed along with the respective
data of its mutual funds counterparts (one index fund and 3 active mutual
funds) so that we will examine various issues concerning return, risk and expense
features of these competitive investment vehicles. Four different openended
mutual funds are used in the study, each of which has the same benchmark
as the ETF considered. The applied empirical analysis provides various
interesting findings. At first, the classic mutual funds are more expensive than
the ETF but they perform better and are less volatile. Going further, the ETF is
more conservative that the open-ended mutual funds. Moreover, the relevant
performance of the ETF in respect of the return of the tracking index is better
than the corresponding performance of the funds. Finally, the tracking error of
the ETF is reasonably found to be lower than the tracking error of the actively
managed funds but it is greater than the tracking error of the index fund.
