ETF is a transactional open index fund, which is also commonly called Exchange Traded Funds (ETF). It is an open-end fund that is listed and traded on the exchange and has variable fund share.

Warren Buffett has repeatedly recommended retail investors to buy ETFs.

what are the advantages of p>ETF?

firstly, ETF overcomes the shortcomings of closed-end fund discount trading. ETF funds can be traded in the secondary market, and they can also directly purchase and redeem a basket of stocks from fund managers, which makes it possible for investors to arbitrage in the primary and secondary markets. It is the existence of this arbitrage mechanism that inhibits the deviation between the secondary market price and the net value of the fund, so that the transaction price in the secondary market is basically the same as the net value of the fund.

Secondly, compared with other open-end funds, ETF funds have the characteristics of low transaction cost, convenient transaction and high transaction efficiency. In the past, when investors invested in open-end funds, they generally purchased and redeemed funds from fund management companies through banks, brokers and other consignment agencies. The transaction fees were generally 1%-1.5%, while ETFs only needed to pay up to .5% of bilateral fees. Generally, the redemption money of open-end funds will not arrive until 3 days (at least 7 days) after redemption. Buying different funds requires going to different fund companies or banks and other agencies, which is not convenient for investors to trade. However, if you invest in ETF funds, you can trade directly through the exchange according to the public quotation, just like buying and selling stocks and closed-end funds, and the funds will arrive the next day.

In addition, ETFs generally adopt a completely passive indexation investment strategy to track and fit a representative underlying index, so the management fee is very low (.5%) and the operation transparency is very high, which allows investors to invest in a basket of component stocks in the underlying index at a lower cost, so as to fully diversify their investments and effectively avoid the unsystematic risks of stock investment.