Which is more risky, lof fund or fof fund?
Lof fund and etf fund belong to medium and high risk products, and the risk level is the same. However, in terms of product characteristics, lof fund is higher than etf fund and belongs to active fund. The goal of active fund is to surpass market income, while etf fund belongs to passive fund, which passively follows the trend of index. The goal of passive fund is to pursue market income, so from this perspective, lof fund is higher than etf fund.
Lof fund is called listed open-end fund. After the issuance of this fund, investors can buy and sell on the exchange and purchase and redeem in the OTC market. Etf funds follow a specific index and buy all or part of the constituent stocks in the index in order to obtain the same income as the index. If investors pursue excess returns, they can choose lof funds, and if investors pursue market returns, they can choose etf funds.
What are the advantages and disadvantages of lof fund?
Advantages of lof fund:
1, Lof funds can be traded over the counter, and investors can use this function to arbitrage.
2. Simply put, lof has increased the on-site trading of open-end funds. The purchased fund shares can be sold on t+ 1 day, and the fund funds sold according to the securities trading settlement method can be used on the same day. T+ 1 can be withdrawn. Compared with over-the-counter trading, buying the day before buying and selling the day before redemption is at most 6 days in advance.
3. Investors can reduce transaction costs by trading funds in the secondary market, usually by 0.5% through mutual ETF units.
Lof fund disadvantages:
1 and lof have more varieties than exchange traded funds (ETFs), but they are still less than ordinary open-end funds. Therefore, for those investors who need to invest in both high-risk funds and low-risk funds, the existing varieties of lof funds still cannot fully meet their investment needs.
2. It is difficult for investors with small capital to achieve arbitrage.