Etf and lof funds are different in meaning, place of purchase and redemption, object of purchase and redemption, trading restrictions, investment strategy and net quotation frequency.
1 has different meanings.
Etf (Exchange Index Open-end Fund) is an open-end fund that tracks an index and can be listed on the exchange. Lof fund is a public offering-to-open fund, a fund type initiated by China, and a Chinese etf fund.
2. The place of purchase and redemption is different.
Etf and lof combine the characteristics of closed-end funds and open-end funds, which can be redeemed in both the primary market and the secondary market. But the place of purchase and redemption is different. The subscription and redemption of etf can only be carried out in the exchange, that is, only on-site transactions can be carried out, and lof can be carried out in both the exchange and the consignment outlets.
3. The targets of subscription and redemption are different.
Etf adopts "physical purchase, physical redemption". Investors buy a basket of stocks and redeem a basket of stocks. Lof fund may buy a basket of stocks, but it redeems cash.
4. Different trading restrictions.
Etf has a high threshold, with a minimum transaction requirement of more than 500,000 copies. Only investors with large funds can participate. Lof has no special requirements for subscription and redemption, and ordinary investors can also participate.
5. Different investment strategies.
Etf funds track an index, such as SSE 50eft and SSE 50 Index, and completely copy the constituent stocks of SSE 50, so it is a completely passive investment method. Lof is just an ordinary open-end fund, which can be listed on the exchange. It can be passive investment or active investment.
6. The frequency of online quotation is different.
In the secondary market, etf funds provide fund quotation every 15 seconds, while lof is 1 time or one day 1 time.
Stock differentiation
In terms of trading methods, ETFs are exactly the same as stocks. As long as investors have a securities account, they can buy and sell ETFs at any time, and the transaction price changes in real time according to the market price, which is quite convenient and highly liquid.
Compared with direct investment in stocks, ETF has the following advantages:
1 Like closed-end funds, there is no stamp duty.
2. Buying an ETF is equivalent to buying an index portfolio. For example, the price trend of ETFs with the above-mentioned SSE 50 index should be consistent with the SSE 50 index, so buying SSE 50 index ETFs is equivalent to buying 50 blue-chip stocks, which can achieve the effect of diversifying risks for small and medium-sized investors.
3. In terms of portfolio transparency, the SSE 50 Index is compiled by authoritative organizations, and the composition of the ETF corresponding to the SSE 50 Index is quite transparent. Investors can directly invest in an ETF instead of investing in a basket of stocks.
In addition to normal market transactions, investors can also choose to purchase and redeem ETFs.