There are all kinds of mutual funds, and all kinds of ETFs, so this is an over-simplification, but when people compare the two, they are generally referring to mutual funds as actively managed, and ETFs as passively managed, index funds. And I presume that is the implication of the article you referred to, bluejays.
Actively managed funds are ones where the managers are actively picking or choosing securities - the most common example being stocks (but could be any securities), so the manager might pick 40 or so Canadian stocks, or US stocks, or maybe tech stocks, or whatever exposure they are trying to create. The main characteristics of actively traded mutual funds are that they have high MERs (management expense ratios), which just means high fees - typically in the 2 - 2.5% range.
ETFs (which stands for exchange-traded funds) are often used as examples of passive funds, meaning they offer exposure to an entire asset class, such as the entire Canadian stock market or the US stock market. And they might hold 200-300 securities or more (sometimes thousands), instead of the 40 or so that an active fund holds. Passive funds don't trade actively, they simply hold the market (or more accurately, a large enough subset of the market that will behave like the market). Since there isn't a bunch of trading and ongoing analysis (which is required before trading), they are cheaper to manage, and therefore can offer significantly lower fees - typically in the 0.1 - 0.5% range.
There are a couple of reasons why ETFs (index funds) are favoured over active funds: first of course, are the lower fees; another is that you know what you're getting - meaning that if you buy a passive index fund that replicates the Canadian stock market, you can be confident that it will perform similarly to the Canadian stock market. However, with an active Cdn fund, the manager might have a bias to one sector or another, and the return might be quite dissimilar to the Cdn stock market, so you never really know what you're getting. For example, one manager might favour O&G stocks, while another might favour consumer staples. Both would be listed as Cdn stock funds, but they would behave very differently.
Finally, active managers tend to under-perform the market over time. That is largely due to fees, however, many studies have shown that active managers sooner or later will under-perform their asset class even after accounting for fees, due to errors, biases, and emotional decisions.
Long story short: ETFs (passive or index funds) are cheaper, and tend to perform better than mutual funds (specifically, active mutual funds).
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