ETF fund
ETF is a transactional open index fund, referred to as exchange traded fund (ETF), which is an open fund with variable fund share and listed on the exchange.
Generally speaking, it is a decentralized fund share that can be listed and traded at any time. This is the same as stock trading, but the target is different.
Open-end funds that invest in ETF funds.
ETFs can only be "bought on the spot" through securities accounts, while ETFs are linked to funds and can be redeemed on off-exchange fund platforms.
Features:
ETF is a special open-end fund, which not only absorbs the advantages that closed-end funds can trade in real time on the same day, but also allows investors to buy and sell ETF shares in the secondary market like closed-end funds or stocks. ?
At the same time, ETF also has the advantage that open-end funds can purchase and redeem freely. Investors can buy or redeem ETF shares from fund management companies just like buying and selling open-end funds.
ETFs are usually managed by fund management companies, and fund assets are a basket of stocks. The types of stocks in the portfolio are the same as those in a specific index (such as SSE 50 Index), and the proportion of stocks is the same as that of the constituent stocks of the index.
Compared with closed-end funds, ETFs:
Similarly, they are all listed on the exchange, just like stocks, which can be traded at any time in a day. The difference is:
1, ETF is more transparent. Since investors can purchase/redeem continuously, the frequency of asking fund managers to announce their net worth and portfolio is also accelerated accordingly.
2. Due to the existence of the continuous subscription/redemption mechanism, theoretically there will not be too much discount/premium between the net value of ETF and the market price.
Compared with open-end funds, ETFs:
There are two advantages:
First, ETF is listed on the exchange and can be traded at any time within one day, which is convenient for trading.
Open-end funds can only be opened once a day, and investors only have one trading opportunity every day (that is, subscription and redemption);
Second, when ETF redeems, it delivers a basket of stocks without keeping cash, which is convenient for managers to operate and can improve the management efficiency of fund investment.
Open-end funds often need to keep some cash for redemption. When investors of open-end funds redeem their fund shares, they often force fund managers to constantly adjust their investment portfolios, and the resulting taxes and losses of some investment opportunities are borne by those long-term investors who have not made redemption requests.
This mechanism can ensure that when some ETF investors ask for redemption, it will not have much impact on long-term ETF investors (because the redemption is stocks).