With the continuous improvement of people's wealth level, more and more people begin to pay attention to investment and wealth management and stock funds. Among these investment options, LOF and ETF funds have also become the two varieties that investors are most concerned about. So, what's the difference between them? Let's analyze it from multiple angles.

1. Definition and type

LOF, or graded fund, is a financial derivative issued in the form of "fund", which can be used to buy stocks. According to the risk and income level of the target assets, the foundation divides them into two parts: the listing part and the creation part. And ETF, namely exchange-traded fund, is also called "listed index fund" in Chinese. It is a fund that is listed and traded on the exchange in the form of stocks, and investors can buy and sell through securities accounts just like buying and selling stocks.

2. Forward/backward lever

Forward leverage uses the leverage of the underlying assets to calculate the net value of the fund according to the changes in the holding value of the target assets. On the other hand, reverse leverage is traded by selling short positions, that is to say, the fund will take some measures during the holding period, and adopt the investment strategy of reverse leverage while holding forward leverage, so as to obtain higher yield. Among them, LOF funds use positive leverage, while ETFs use reverse leverage in some funds.

3. Management fee

Generally speaking, the management fee of LOF will be higher than that of ETF. Because LOF usually needs to bear more supervision, transaction and other costs, it also needs to pay more fees to pay the investment manager's salary, bonus and so on. ETF funds, on the other hand, mostly adopt passive management, with low management cost.

4. Object and method of investment

LOF and ETF not only have different investment objects, but also have different investment methods. LOF funds tend to invest in small and medium-sized stocks, while ETFs pay more attention to stock investment in market frontiers and growth areas, and the trading mechanism of ETFs is more flexible.

Generally speaking, LOF and ETF are two different types of funds, and their investment strategies, operating basis, investment objects and methods are different. These factors will have an impact on the risks and benefits of both. Therefore, when investors choose investment funds, they need to choose the types of funds that suit their risk preferences and investment objectives.