Futures vs ETF’s – What’s The Difference?

Futures out trade ETF’s by 12x. Futures are more capital efficient offer potential tax benefits, and around the clock trading to speculate & manage risk. While equities are closed, pure exposure to the underlier and no management fees.

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Futures margin is capital efficient with performance bond margin usually less than 5% of the notional amount. Liquidity, primary futures contracts such as the E-mini S&P 500, treasuries, crude oil, and metals all out trade in dollar terms their ETF counterpart. Tracking the underlying, futures track the underlying very closely, with very little tracking error. Tax advantages, a profitable short-term trade with futures will pay less in taxes than with an ETF due to IRS section 1256 treatment 60/40 blend of short and long-term gains. Lastly, what I think is a major benefit of futures over ETF’s is 24-hour access, these days, markets are moving around the clock, and if you want 24-hour access, six days a week, futures are a far better choice than ETF’s. As you can see, there’s lots of benefits to trading futures instead of ETFs.

Past performance is not indicative of future results.