The wake systems of ducted and conventional marine propellers are compared for a highly loaded condition by exploiting results of large eddy simulations, conducted on a cylindrical grid consisting of 3.5 billion points. The results demonstrate a dramatic change of both performance and flow physics, due to the nozzle. The efficiency of propulsion is increased by about
$30\,\%$, but the thrust generated by the propeller is reduced, replaced in most part by that produced by its nozzle. As a result, weaker coherent structures are shed in the wake on the ducted propeller, compared with the conventional one. Meanwhile, the tip leakage vortices experience a faster instability into smaller turbulent structures. Therefore, the wake signature of the ducted propeller, detrimental to its interaction with downstream bodies, is reduced, compared with that of the conventional propeller operating with no duct. The source of the faster instability of the tip leakage vortices is different from the typical one of the tip vortices shed by conventional propellers. The latter is attributable to phenomena of short- and long-wave instabilities of the helices of each tip vortex, eventually leading to mutual inductance, leapfrogging and breakup into turbulence. In contrast, the former is tied to the shear developed between the tip leakage vortices and the boundary layer of the inner surface of the nozzle, rather than to the interaction between vortices shed by different blades.