The main difference between linked funds and index funds lies in their different categories.

Index funds are a large category, including: traditional index funds, index-enhanced funds, ETF funds and ETF-linked funds.

Linked funds, namely ETF linked funds, belong to a classification under index funds, mainly tracking their corresponding ETF funds.

Composition of linked funds

The main investment target of linked funds is their corresponding ETF funds.

Can be understood as:

ETF fund is a direct investment in each constituent stock it tracks;

ETF linked funds mainly invest in their corresponding ETF funds.

Unlike ETF funds, linked funds are over-the-counter open-end funds and need to reserve some liquidity to meet the daily redemption of investors.

Therefore, the position composition of linked funds is generally: more than 90% is the target ETF fund+10% is independent and flexible. Therefore, the trend performance of linked funds is slightly different from that of ETF funds, and the tracking error of ETF funds is smaller and the fitting degree with the corresponding index trend is higher.

Selection of linked funds

expense

ETF funds can be listed on the exchange with lower transaction costs.

Linked funds are OTC open-end funds. Although the fee rate is lower than that of ordinary equity funds, it is still higher than that of ETF funds.

market

ETF funds can be purchased and redeemed in the primary market or traded on the exchange floor. Theoretically, there is an opportunity for cross-market arbitrage.

Linked funds can only be purchased and redeemed off-site, and cannot be arbitrage across the market.

price

On-site ETF funds can buy and sell transactions in real time, and refresh the quotation every six seconds.

Linked funds, like ordinary open-end funds, publish their net values every day.

Investment model

ETF funds do not support fixed investment operation and can only be bought manually.

Linked funds support fixed investment operation, and set the fixed investment time and amount according to the needs of investors.

To sum it up

Compared with ETF funds, linked funds have higher transaction costs, lower transaction thresholds and more convenient investment methods.

Linked funds are a good substitute for investors who like ETF funds but don't have an exchange shareholder account.

At the same time, linked funds also support fixed investment operation, which is more suitable for stable investors who open positions in batches and gradually intervene under uncertain circumstances.