According to different investment methods, ETFs can be divided into index funds and actively managed funds. ETF is an open-end fund, which can be purchased and redeemed in kind at any time. During the trading hours, investors can buy and redeem ETF shares in the form of portfolio securities at any time in the primary market. Therefore, ETF fund is a transactional open index fund, which is commonly called exchange-traded fund. It is an open-end fund with variable fund share listed on the exchange. ETF is a trading fund, which can be traded in the secondary market of the stock exchange. As a product traded on the exchange, ETF can be bought and sold as freely as stocks. ETF is often called "large-cap stock" or "index stock" because of its outstanding trading nature.

If ETF is represented by a formula, it is: ETF = transaction+index+fund. ETF is the abbreviation of English exchange traded fund, which is translated into Chinese as "transactional open index fund", also known as "exchange traded fund". ETF can be bought and sold on the exchange, and it is also a fund that tracks a specific index, and can be purchased and redeemed at any time. ETF is an index fund that tracks specific securities indexes. In fact, ETF is an index investment tool. By copying the basic index, it constructs portfolio securities that track the index changes, so investors can trade a package of securities by buying and selling products.

Fund managers of index funds invest in index stocks. They construct the portfolio of an index fund by buying some or all of the stocks contained in an index, in order to make the change trend of this portfolio consistent with the index, so as to obtain roughly the same rate of return as the index. For example, the GEM 50ETF( 159949) tracks the top 50 stocks in the GEM market according to a certain proportion, and the GEM 50ETF replicates this combination and works closely with it. After layer-by-layer analysis, the concept of ETF fund is very clear. It is a special type of open-end fund. Investors can use a basket of stocks to buy or redeem fund shares from fund companies, or they can buy and sell ETF shares at market prices in the secondary market.