ETF is a kind of index fund, which tracks a specific index. Investors buying and selling an ETF is equivalent to buying and selling the index it tracks. This time, Bian Xiao sorted out what misunderstandings should be careful when buying funds for your reference.
What misunderstandings should I be careful about when buying funds?
When buying funds, you need to be careful of the following misunderstandings:
Excessive pursuit of short-term gains: don't be attracted by short-term high returns and blindly buy funds. Short-term gains may be the result of market fluctuations, and excessive pursuit of short-term gains tends to ignore the long-term performance and risks of funds.
Neglect of expenses: expenses are an important part of the fund, and high expenses may have a negative impact on long-term investment income. When purchasing funds, we should carefully understand and evaluate the cost structure of funds and choose funds with reasonable rates.
Blind follow-up hotspots: Market hotspots are often short-term, and blind follow-up may lead investors to follow suit and miss reasonable buying opportunities. We should choose funds according to our investment objectives and risk tolerance, and continue to invest regularly.
Lack of dispersion: investors should disperse their investment funds in different funds to reduce the risk of specific funds. Excessive concentration on one fund or one industry may increase investment risk.
The replenishment process of the fund
Monitor fund performance: regularly monitor the fund performance, such as changes in fund net value and market trends.
Evaluate the fund prospect: according to the market situation, the fund prospect and its own investment strategy, evaluate whether it is necessary to make up the position.
Clear the quantity and timing of covering positions: determine the quantity and ideal timing of covering positions. It can be considered to cover the position by averaging the purchase price through regular fixed investment.
Trading rules of different funds
Subscription: Investors participate in fund products by purchasing fund shares, and can pay corresponding subscription fees by submitting subscription orders to fund companies, sales organizations or online platforms.
Redemption: Investors can sell their fund shares and convert fund assets into cash. You can choose the redemption share by submitting redemption instructions to fund companies, sales organizations or online platforms, and return the corresponding funds within a certain period of time.
Dollar-cost leverage (DCA for short): investors can choose to purchase fund shares in fixed amount on a regular basis, regardless of the market price, so as to share the purchase cost equally and reduce the impact of market fluctuations.
DividendReinvestment: Some funds will give investors the option whether to reinvest the dividend income to buy fund shares when paying dividends, so as to increase the holding share and long-term return.
Trading time: The trading time of the fund is usually conducted at a specific time on the working day, and the specific time may vary according to the fund company and sales channels. Generally speaking, the trading hours of trading funds will be limited.
What are the terms in the fund trading market?
PrimaryMarket: refers to the initial issuance market of fund shares, and investors can purchase newly issued fund shares by subscription.
SecondaryMarket: refers to the secondary market where fund shares are bought and sold on the exchange and OTC markets, and investors can buy and sell existing fund shares in this market.
Exchange-traded fund (ETF): It is a fund that can be traded in the form of stocks, which can be bought and sold in stock exchanges, similar to stocks.
NetAssetValue (NAV): indicates the net value of each share of the fund, which is usually published every trading day and used to calculate the amount of subscription and redemption.
MoneyMarketFund: a low-risk fund, which mainly invests in short-term bonds and money market instruments, with the goal of ensuring the safety of principal and providing stable income.
Trading rules of ETF funds
1. Purchase through securities account. ETF fund is an on-site fund, and investors need to use securities accounts for subscription. ETF funds, like stocks, have real-time price changes and can be traded directly in the market and bought and sold in real time.
2. Trading time. The trading hours of ETF funds are 9: 30am-11:30am and afternoon13: 00pm-15: 00pm every trading day, which is closed on weekends and legal holidays.
3.T+ 1 transaction. ETF funds buy on the same day and need to wait for the next trading day to sell. After the investor sells the ETF fund, the funds will be received immediately, and the funds can be withdrawn to the bank card the next trading day.
4. Price first, time first. For the submitted ETF fund orders, the highest price will be traded first under the same submission time; In the case of the same submission price, the transaction is made first.
5. The trading starting point is 100 shares. The minimum buying units of ETF funds are 1 lot and 100 lot, and each purchase must be an integer multiple of 100 shares. The minimum change unit of ETF price declaration is 0.00 1 yuan.
6. Price limit. ETF funds rise and fall from the first day of listing. Growth enterprise market ETF, Chuang50ETF, science and technology innovation board ETF, Chuang50ETF and Shuangchuang 50ETF are limited to 20%, and other ETF funds are limited to 10%.