ETF is the abbreviation of exchange traded fund, that is, "transactional open index securities investment fund", referred to as "transactional open index fund", also known as "exchange traded fund".
ETF is a new type of open-end fund that appeared in the United States in recent years. It comes into being with the development and perfection of combinatorial trading and programmed trading technology. Investors can complete a portfolio transaction at one time by issuing a single trading order. The emergence of this combination trading technology not only saves trading time and reduces trading costs for block traders, but also provides strong technical support for the birth and operation of ETF.
ETF is a special form of open-end index fund, which combines the advantages of closed-end fund listing and trading, free subscription or redemption of open-end fund, and highly transparent investment management of index fund. It overcomes the disadvantages of closed-end funds trading at a discount, open-end funds unable to be listed and traded, heavy redemption pressure, and active investment lacking market opportunities and stock selection ability, and at the same time minimizes the transaction cost of investors.
# # Specifically, ETFs have the following characteristics: (1) The issuance and redemption of ETFs are only aimed at the wholesale of institutional investors, not at the retail investors of individual investors; (2) Investors usually use a basket of securities instead of cash when purchasing and redeeming ETFs; (3) Retail transactions of ETFs are conducted at the market price during the normal trading hours of the stock exchange where ETFs are listed. For individual investors, they can buy and sell ETFs in the secondary market at any time, just like buying and selling stocks and closed-end funds. (4) The transaction price of ETFs in the secondary market is very close to its unit net value, and generally there will be no big discount or premium. (5)ETF takes a market index as the target index, and tracks the target index by completely copying or statistical sampling, so as to obtain a return on investment close to the target index.
The investment mode of ETF is different from the traditional securities investment fund. Traditional active stock investment funds mainly rely on the analysis of stocks by fund managers to make trading decisions. The method of ETF is completely different. Fund managers do not make buying and selling decisions according to their personal intentions, but passively decide the stocks they invest in according to the composition of index constituent stocks, and the proportion of investment stocks is consistent with the weight of index constituent stocks. Each ETF tracks a specific index, and the tracked index is the ETF's "target index". The "underlying index" of general ETF requires popularity, market representativeness, good liquidity, stability, objectivity and transparency when compiling. For example, the SSE 50 index meets the relevant requirements of ETF products and is suitable as the "target index" of the first ETF product in SSE. The net price of ETF can be dynamically announced in real time by the exchange market disclosure system together with the underlying index, and ordinary investors can buy and sell synchronously according to the fluctuation of the index during trading hours, thus realizing the dream of many people to make money as soon as they earn the index.
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