1. Long-term investment: ETF has good risk dispersion and high transparency, and is less influenced by subjective factors of managers, so it has strong predictability and more sufficient investor information. The experience of overseas mature markets proves that the probability of actively managed funds continuously outperforming the index is very low, and the longer the investment time, the smaller the probability of fund managers outperforming the index; Because of the low cost of index funds, long-term investment will significantly improve the relative income level of index funds because of the influence of compound interest. From the perspective of long-term investment and wealth preservation and appreciation, investing in ETF is a better choice. Investors can adopt the strategy of buying and holding at a low level and share the capital appreciation brought by the long-term growth of the index.
2. Short-term investment: ETF is an ideal tool for investors who want to get in and out of the whole market or a specific part of the market quickly to seize some short-term opportunities. This is because ETF, like stocks and bonds, can buy and sell at a very fast speed and respond to market changes. Although every transaction has a cost, the transaction rate is relatively low. Investors can actively trade ETFs, and get the band benefits brought by intraday and short-term (more than one day) fluctuations of the index.
3. Timing: ETF is a combination of the constituent stocks of the underlying index it tracks, so increasing or decreasing ETF is equivalent to increasing or decreasing stock positions. For investors who need to increase or decrease their stock positions on a large scale when the market changes, directly increasing or decreasing ETF can avoid the trouble of multiple stock deliveries, reduce the impact on the stock price and quickly enter and leave the market. The special arbitrage mechanism of ETF also helps to improve liquidity and reduce the impact cost of large transactions. Therefore, ETF can be an efficient timing tool for investors.
4. Rotation investment: Investors can actively adjust the ETF portfolio, buy and sell ETFs representing different styles and sectors by updating the weight and positions of ETFs in the portfolio, build various market exposures and realize various investment strategies. In portfolio management, ETFs can be used to achieve diversified international (such as future cross-border ETFs), domestic, industry, style and other market exposure, so as to build investors' preferred portfolio. For example, when investors are optimistic about investment opportunities in a certain country, they can realize exposure to foreign stock markets by buying ETFs in that country instead of directly investing in foreign stocks; When investors prefer a certain industry or a certain sector, they can also invest in the corresponding industry ETF. This not only satisfies specific investment preferences, but also disperses risks to a certain extent.
5. Arbitrage trading: When the transaction price in the ETF secondary market deviates from the net value of fund shares, that is, when there is a discount/premium, investors can arbitrage between the primary market, the secondary market and the stock spot market to obtain risk-free income. In a trading day, investors can perform multiple operations. On the premise of avoiding risks, improve the profitability of holding ETF constituent stocks and improve the efficiency of capital use.
6. Transactional open index fund, also known as ExchangeTradedFund (ETF), is an open-end fund with variable fund shares listed on the exchange. Transactional open-end index fund is a special type of open-end fund, which combines the operating characteristics of closed-end fund and open-end fund. Investors can buy or redeem fund shares from fund management companies, and at the same time, they can buy and sell ETF shares in the secondary market at the market price like closed-end funds. However, the purchase and redemption must use a basket of shares for fund shares or use a basket of shares for fund shares. Because there are both secondary market transactions and subscription and redemption mechanisms, investors can carry out arbitrage transactions when there is a difference between the market price of ETF and the net value of fund units. The existence of arbitrage mechanism makes ETF avoid the common discount problem of closed-end funds. According to different investment methods, ETFs can be divided into index funds and actively managed funds. Most foreign ETFs are index funds. ETF launched in China is also an index fund. ETF index fund represents the ownership of a basket of stocks, which refers to the index fund that is traded on the stock exchange like stocks, and its trading price and fund share net value trend are basically consistent with the tracked index. Therefore, investors buying and selling an ETF is equivalent to buying and selling the index it tracks, and can get basically the same income as the index. It adopts a completely passive management mode, aims at fitting the index, and has the characteristics of both stocks and index funds.