ETF combines the operating characteristics of closed-end funds and open-end funds. On the one hand, it can be bought and sold in the secondary market of the exchange like a closed-end fund, on the other hand, it can be purchased and redeemed like an open-end fund.

ETF purchases in the form of portfolio securities, that is, investors hand over a basket of stocks and cash to the fund management company according to the purchase and redemption list published by the fund management company of ETF on the same day; Based on this, fund management companies have created corresponding new ETF shares and increased the external circulation of ETFs. Salvation is the opposite process. The subscription and redemption of ETF can only be paid by portfolio securities, and only in some cases can some constituent stocks be conditionally allowed to use cash instead.

The scientific name of ETF is transactional open index fund, which means it is an open fund and can be traded in the secondary market. Index fund refers to a fund whose investment target is a basket of stocks included in the index.