ETF is the abbreviation of ExchanGETradedFund. Simply put, ETF is an open-end fund product, which will track the indexation and securitization of stock exchange transactions and provide investors with the participation of index performance. ETF is actually an index investment tool, which builds a portfolio by copying the basic index, tracks the changes of the index, and allows investors to trade a basket of securities by selling a product. ETF equals index+transaction+fund: We can further understand the connotation of ETF from three aspects: from the perspective of investment model, ETF is an index fund that tracks specific securities indexes; From the perspective of trading channels, ETF is a trading fund that can be traded in the secondary market of the stock exchange; From the perspective of operation mode, ETF is an open-end fund, which can be purchased and redeemed at any time. In a word, ETF has the characteristics of low cost and high transaction efficiency, which provides a convenient and low-cost tool for investors to invest in specific markets or industry indexes. Therefore, ETF is also called excellent large-cap stocks, that is, stocks with risk-free selection, convenient trading and consistent index trend. The most prominent function of ETF is trading: as a product traded on an exchange, ETF can trade freely like closed-end funds or stocks. During the trading period, investors can buy, sell and redeem ETF shares in the form of securities at any time in the primary market, that is, when applying for redemption, investors will exchange a basket of portfolio securities designated by ETF tracking index for ETF shares; At redemption, investors convert ETF shares into a basket of securities. In the secondary market, ETFs are listed on the exchange like ordinary stocks, and investors can buy and sell ETF stocks at market prices like stocks.