ETF is a listed index fund, the full name is ExchangeTradedFunds, and the Chinese name is Exchange Trading Fund. However, funds are not all index funds. At present, index funds are the mainstream of ETFs at home and abroad, accounting for a high proportion. Therefore, ETF is generally called transactional index fund, which is also known as index fund listed on the exchange.

1. Improve trading activities

Generally, open-end index funds can only be opened once a day, and investors only have one trading opportunity every day, that is, purchase or redemption; ETF is listed on the exchange and can be traded at any time in a day. Investors can buy or sell at market prices at any time, and gain income through intraday fluctuations. Of course, this requires operational skills.

Two. Improve the efficiency of fund management

Open index funds often need to keep some cash to deal with redemption. When investors want to redeem fund shares, they often force fund managers to adjust their investment portfolios, and the resulting taxes and losses of some investment opportunities are borne by those long-term investors who have not made redemption requests. When ETF is redeemed, it is to deliver a package of shares without keeping cash, which is convenient for fund managers to operate and can improve the management efficiency of fund investment.

3. Increase market hedging tools

For example, institutional investors who have stocks but are not optimistic about the performance of the stock market can use securities lending to sell ETFs for reverse operation to reduce the amount of spot losses. For the whole market, the birth of ETF makes the financial investment channels more diversified and also increases the short-selling channels in the market.