(1)ETF overcomes the defects of closed-end fund discount trading, and its system design is flexible. In the investment strategy, it can cover a variety of securities and a variety of asset allocation methods. In the trading system, a basket of securities can be easily traded through one-time trading activities; In terms of risk diversification, we can not only track the whole market index covering the whole market, but also track the industry index or style index of a certain market field, which can effectively disperse or reduce market risks. Closed-end fund discount transaction is a common feature of global financial market, and it is also a phenomenon that classical financial theory can't explain well so far, which is called "the mystery of closed-end fund discount". This phenomenon is particularly prominent in China. At present, the average discount rate of 54 closed-end funds listed on the Shanghai and Shenzhen stock exchanges is close to more than 30% relative to their unit net value. Due to the discount trading of closed-end funds, the development of closed-end funds around the world is shrinking, and some of its original advantages are also covered up. ETF funds can be traded in the secondary market, or they can directly purchase and redeem a basket of stocks from fund managers, which makes it possible for investors to arbitrage in the primary and secondary markets. It is the existence of this arbitrage mechanism that inhibits the deviation between the secondary market price and the net value of the fund, making the transaction price in the secondary market basically consistent with the net value of the fund.
(2) Compared with open-end funds, ETF funds have the characteristics of low transaction cost, convenient transaction and high transaction efficiency. At present, investors invest in open-end funds by buying and redeeming funds from fund management companies through banks, brokers and other consignment agencies. Generally, the transaction fee of stock-based open-end funds is above 1%, and the redemption money will not arrive until 3 days after redemption. Buying different funds requires going to different fund companies or banks and other institutions, and the transaction convenience is not too high. However, if investors invest in ETF funds, they can trade directly through the exchange according to the public quotation, just like stocks and closed-end funds, and the funds will arrive the next day.
(3)ETF also provides many trading tools for short-term investment. For example, ETF allows the use of margin for leveraged trading; Allow short selling; Stop loss and other restrictive trading orders are allowed, and in these respects, the use of * * * funds is completely prohibited. Because short selling ETF is short selling a basket of stocks, which has little effect on a single stock, short selling ETF is allowed in the United States. With the gradual deepening of financial innovation, China's financial market will allow short selling of ETFs.
(4)ETF generally adopts a completely passive indexation investment strategy to track and fit the representative underlying index, so the management fee is very low and the operation transparency is very high, which enables investors to invest in constituent stocks in a basket of underlying indexes at a lower cost, thus fully diversifying their investments and effectively avoiding the unsystematic risks of stock investment.