Transactional open-end index fund, commonly known as ExchangeTradedFund (ETF), is a kind of open-end fund with variable fund share and belongs to a special type of open-end fund. The following are some advantages of ETF for your reference.

Four advantages of ETF

ETF has risen rapidly in the international market because of its product design innovation, and has the following advantages.

ETF adopts index investment strategy. The deviation between ETF and the underlying index is small, and the investment in ETF can obtain similar income to the underlying index; Investors can invest in the underlying index at a lower cost, making investment as simple as investing in a stock.

Etfs can be listed and traded. Like stocks, ETFs continue to trade during trading hours, and investors can buy and sell according to the real-time trading price, so as to better grasp the trading price.

Etfs are cheap. ETF greatly saves operating expenses, such as research expenses and transaction expenses, by replicating index and physical redemption mechanism. ETF management fees and custody fees are not only far lower than those of actively managed stock funds, but also lower than those of traditional index funds that track the same index. The transaction cost of ETF secondary market is similar to that of stocks, which greatly reduces the transaction cost of investors. ETF is a brand-new investment tool. In the field of investment, ETF is no longer just an input product, but an increasingly instrumental product. Investors can invest in ETF to implement stock reinvestment, asset allocation, long-term investment, arbitrage trading, timing and short-term investment.

Overview of ETF

ETF is also called "exchange traded open index securities investment fund" or "exchange traded fund". ETF is a fund that tracks the changes of the "underlying index" and is listed and traded on the stock exchange. ETF is a special type of open-end fund, which combines the advantages of closed-end fund and open-end fund. Investors can buy and sell ETF shares in the secondary market, or purchase or redeem ETF shares from fund management companies, but they must exchange a basket of stocks (or a small amount of cash) for fund shares or a basket of stocks (or a small amount of cash) for fund shares. Because there are both secondary market transactions and subscription and redemption mechanisms, investors can carry out arbitrage transactions when there is a difference between the transaction price in the ETF secondary market and the net value of the fund unit.

For ETF, the exchange displays an IOPV (Individually Optimized Portfolio Value) every 15 seconds, which instantly reflects the changes in the net value of the fund caused by the rise and fall of the index.

ETF combines the trading characteristics of closed-end fund and open-end fund in trading mode, which can be bought and sold on the exchange or purchased and redeemed. There are two ways to buy (subscribe) fund shares, one is cash, and the other is to use a basket of stocks. But when selling or redeeming, investors get a package of shares instead of cash. The biggest function of ETF is that investors can use the characteristics of index futures and commodity futures of this financial product to arbitrage, which is helpful to increase the trading volume of the stock market.

ETF was first produced in Canada, but its progress and maturity are very important in the United States. Take the United States as an example From the end of 1993 to the end of 2003, the assets of ETF funds in the United States increased from $464 million to1509.83 million, equivalent to an increase of 324 times. By the end of June 2004, the total assets of global ETF products reached 246.4 billion US dollars, covering all major securities markets in the world. It is one of the fastest growing financial products in the past 65,438+00 years and has become a popular investment tool.

The Significance of Launching ETF in China

1. Implement the State Council's "Nine Opinions", promote product innovation in the securities market, and lay the foundation for launching new products including index futures in the future;

2. Improve the core competitiveness of China's securities market relative to overseas markets by expanding product categories;

3. Further enhance the liquidity of large-cap blue-chip stocks through the scale trading of ETFs;

4. In line with the current international market trend of indexed investment, ETF has become the fastest-growing financial product in history, and its number has increased from $800 million/kloc-0,993 for three funds in 2003 to $26,543.8+0,000 billion for 280 funds;

5. Meet the market demand of all investors, provide an opportunity for small and medium-sized investors to invest in the broader market with small funds, and provide a new arbitrage model for institutional investors.