When I first started to choose a fund, many friends would have such troubles: I often saw strange English words such as ETF and LOF in the name of the fund, and sometimes they were combined with nouns such as "connection", which made people even more confused. Because many friends don't understand what these words mean, they all avoid these incomprehensible funds, so they miss many investment opportunities. However, for friends who want to manage their finances seriously, especially through fund investment, it is necessary to know what these terms stand for respectively. Today I will summarize it for you.

ETF In these English abbreviations, ETF should be the most common word. The full name of ETF is "exchange traded fund". Since most ETFs at home and abroad are index funds, the Chinese translation is "transactional open index funds". The difference between index ETF and ordinary index fund is that ETF buys ETF fund shares through a basket of stocks, and also gets a basket of stocks when redeeming. Investors can use the underlying assets in the market for subscription and redemption, or they can use cash to trade ETF shares in the OTC secondary market. Don't you get it? It doesn't matter. Let's look at the picture below, which will be much easier to understand.

Compared with ordinary index funds, ETF funds have the advantages of high transparency, low management cost and greater flexibility. However, the subscription threshold of ETF is relatively high, basically starting from 6.5438+0 million yuan, and ordinary investors will generally buy it in the market.

LOFF LOF's full name is "listening open-end fund" and Chinese is "listed open-end fund". ETF and LOF are also the most confusing concepts for many investors. LOF is similar to ETF funds, which can be bought and redeemed in cash in the market or traded in the secondary market. Different from ETF funds, when applying for redemption of ETF fund shares, a "basket" of shares is used for exchange, while LOF funds are all exchanged with fund shares in cash. Another difference is that LOF funds can not only passively track the index, but also actively select stocks, and the investment targets are more abundant. Moreover, the LOF subscription threshold is low, and it can be purchased at 1000, but the relative management fee and subscription redemption fee are higher.

ETF connection is complicated, so what is ETF connection? ETF Linked Fund is an index fund that invests in ETFs. As the name implies, ETF linked funds are a bridge to buy ETFs. Because for most retail investors, it is difficult to reach the threshold of ETF subscription. Therefore, when many fund companies issue ETFs, they will also launch ETF-linked funds to facilitate small and medium-sized investors to trade. ETF connection, like ordinary open-end funds, can only be purchased and redeemed off-site. Since there are redemptions every day, ETF-linked funds generally do not invest more than 95% in ETFs. It can be said that ETF-linked funds are actually equivalent to buying ETF funds, and the management fee and custody fee are the same as the corresponding ETFs, but the redemption fee will be a little more expensive than the trading commission in the market.

Sometimes, we can see the combination of ETF connection and LOF-ETF connection (LOF), such as Jiashi CSI 300ETF connection (LOF) and Southern CSI 500ETF connection (LETF connection). Seeing this, many friends may be completely dizzy. Why can ETF join with LOF? In fact, the concepts of ETF connection and LOF are not contradictory. ETF Link is a fund that invests more than 90% in ETFs, and LOF is an open-end fund that can be redeemed in the market or traded over the counter. Due to historical reasons, these funds helped investors meet the needs of OTC trading by issuing LOF funds when ETFs were immature in the past. With ETF, help small and medium investors to trade through ETF connection.