Class A funds generally have subscription and redemption fees, that is, transaction fees. There is no subscription fee for Class C funds, and only one has a sales service fee.
Transactional open-end index fund, commonly known as exchange-traded fund (ETF), is an open-end fund with variable fund share, which is listed and traded on the exchange.
Transactional open-end index fund is a special type of open-end fund, which combines the operating characteristics of closed-end fund and open-end fund. Investors can buy or redeem fund shares from fund management companies, and at the same time, they can buy and sell ETF shares in the secondary market at the market price like closed-end funds. However, the purchase and redemption must use a basket of shares for fund shares or use a basket of shares for fund shares.
Because there are both secondary market transactions and subscription and redemption mechanisms, investors can carry out arbitrage transactions when there is a difference between the market price of ETF and the net value of fund units. The existence of arbitrage mechanism makes ETF avoid the common discount problem of closed-end funds.
According to different investment methods, ETFs can be divided into index funds and actively managed funds. Most foreign ETFs are index funds. ETF launched in China is also an index fund. ETF index fund represents the ownership of a basket of stocks, which refers to the index fund that is traded on the stock exchange like stocks, and its trading price and fund share net value trend are basically consistent with the tracked index.
Therefore, investors buying and selling an ETF is equivalent to buying and selling the index it tracks, and can get basically the same income as the index. Usually, it adopts a completely passive management mode, aiming at fitting an index, which has the characteristics of both stocks and index funds.
Compared with open-end funds, ETF funds have two advantages:
First, ETF is listed on the exchange and can be traded at any time within one day, which is convenient for trading. Open-end funds can only be opened once a day, and investors only have one trading opportunity every day (that is, subscription and redemption);
Second, when ETF redeems, it delivers a basket of stocks without keeping cash, which is convenient for managers to operate and can improve the management efficiency of fund investment. Open-end funds often need to keep some cash for redemption. When investors of open-end funds redeem their fund shares, they often force fund managers to constantly 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.
This mechanism can ensure that when some ETF investors ask for redemption, it will not have much impact on long-term ETF investors (because the redemption is stocks). Income. Usually, it adopts a completely passive management mode, aiming at fitting an index, which has the characteristics of both stocks and index funds.