On-market index fund refers to the fund products traded through the stock exchange, and its investment strategy is to track specific indexes, such as Shanghai Stock Exchange Index and Shenzhen Stock Exchange Index. Compared with traditional funds, on-market index funds are favored by investors because of their relatively low transaction costs.
1. Composition of transaction costs
The transaction cost of index funds in the market mainly includes two parts, one is transaction cost, and the other is management cost. Transaction cost refers to the commission paid when buying and selling funds, which is usually borne by investors themselves. Management expenses refer to the expenses incurred by the fund management company for managing the fund, including the salary of the fund manager, market research expenses, etc. , shall be borne by the fund share holders.
2. Calculation of transaction cost
The transaction cost of on-site index funds usually adopts the method of "fixed fee+proportional fee". Fixed fee refers to the minimum commission to be paid for each transaction, for example, the commission to be paid for each transaction is 5 yuan; Proportional handling fee refers to the commission ratio that varies according to the transaction amount. For example, the commission ratio of the transaction amount below 1 000 yuan is 0. 1%, and the commission ratio between 1 000 yuan and 50,000 yuan is 0.08%.
3. Influencing factors of transaction cost
The transaction cost of on-market index funds is influenced by many factors, the most important of which is the transaction scale and transaction frequency. The larger the transaction scale, the lower the transaction cost, because under a certain commission ratio, the larger the transaction amount, the less the commission. Transaction frequency is also a factor that affects transaction costs. For investors who trade in the day, the transaction cost is relatively high, because each transaction needs to pay a certain commission.
4. Comparison of transaction costs
Compared with other fund products, the transaction cost of on-site index funds is relatively low. In traditional fund products, management costs are usually high, and there are additional expenses such as front-end or back-end expenses. In the index fund, the management cost is relatively low, there is no front-end and back-end cost, and the transaction cost is relatively more transparent.
5. Ways to reduce transaction costs
In order to reduce the transaction cost of index funds in the market, investors can adopt various methods. First, reduce the transaction cost by reducing the transaction frequency and avoid the commission cost brought by daily trading; The second is to reduce transaction costs by choosing brokers with lower commission ratio; Third, by waiting for market fluctuations, choose lower buying points and higher selling points to reduce transaction costs.
The transaction cost of index funds in the market is relatively low, and investors can further reduce the transaction cost by choosing the appropriate commission ratio and reducing the transaction frequency. At the same time, investors should also carefully study other expenses such as fund management fees, fully understand the cost composition of fund products, and make more reasonable investment decisions.