1, different trading methods

The trading mode of ETF is based on the relationship between supply and demand, and the price is traded at a timely matching price. The price is different at different trading hours on the trading day. Index investment does not aim at outperforming the index. Managers will only adjust the portfolio according to the changes in the composition of the index, and do not need to pay investment research and analysis fees, so they can charge lower management fees.

The subscription and redemption of index funds are traded at the price of net value according to the principle of unknown price, and there is only one net value every day.

2. The transaction costs are different.

The highest one-way transaction rate for buying or selling ETF funds does not exceed 0.3%; The index fund needs to pay a handling fee of about 1% when purchasing and 0.5% when redeeming. Because index funds adopt holding strategy, they don't need to exchange shares frequently, and these expenses are lower than those of actively managed funds, and the difference sometimes reaches 1%-3%.

Extended data:

Characteristics of index fund operation:

First, the cost is relatively low. Because the index fund adopts the investment strategy of tracking the index, the fund manager does not need to spend a lot of time and energy to choose the types and trading opportunities of investment tools such as stocks and bonds, thus reducing the management cost of the fund to some extent.

Second, reduce risks by fully diversifying investment. Because index funds widely diversify their investments by tracking the index, the return of their portfolios is basically the same as that of the corresponding index, and the fluctuation of any stock will not have much impact on the overall performance of index funds, thus reducing the investment risk of investors as a whole.

Baidu Encyclopedia-Trading Open Index Fund

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