What is the difference between etf linked funds and ETFs?
1 has different definitions.
Etf-linked fund refers to an open-ended operating fund that invests most of the fund assets in etf funds that track the same underlying index, that is, funds that invest in etf funds (referred to as target ETFs) to replicate the trend of target ETFs. Etf fund is the abbreviation of ExchangeTradedFund, which is an open-end fund listed on the exchange. It usually uses a completely passive management method to track a specific indicator.
Two different trading methods
Etf fund is an on-site fund that can be traded in the stock and securities markets. Etf linked funds are OTC funds. Like ordinary open-end funds, they are bought and sold through fund companies, banks, brokers or funds.
3 Different investment objectives
The investment target of etf funds is index stocks, and etf linked funds directly invest in the target etf funds.
4 Different transaction costs
Etf funds only charge a low transaction commission and are exempt from stamp duty, while etf-linked funds charge subscription and redemption fees.
Five Different Tracking Errors
Etf fund tracking error is small. The position of etf fund can almost reach 100%, and the purchase and redemption have little impact on the net value of the fund.
Etf-linked funds belong to OTC funds, and the contract requires that 5% of current assets (cash+treasury bonds with maturity within one year) must be reserved to deal with the subscription and redemption of funds, so the maximum position can only reach 95%, which is greatly affected by subscription and redemption, and ultimately affects the tracking error.
Six different trading rules
Etf funds have two trading methods:
Physical redemption in the primary market: the minimum redemption unit is generally 500,000 shares or 6,543.8+0,000 shares. It should be noted that investors use a basket of stocks corresponding to etf fund components, not cash.
Secondary market trading: Like stocks, the minimum trading unit is 1 lot (i.e. 100 fund shares), and trading is conducted at the intraday real-time price.
The trading rules of etf linked funds are the same as those of ordinary open-end funds. Generally, it is 1 yuan, which is traded according to the net value of the trading day.
7 different transaction prices
The transaction price of etf-linked funds: the net value of fund shares after closing (unknown price principle).
Transaction price of etf fund: the transaction price is competitive, and the application for redemption is based on the consideration specified in the purchase and redemption list (PCF list).
8 different efficiency in the use of funds
Generally, it takes at least 3-4 trading days for etf linked funds to be redeemed. After the etf fund is sold in the secondary market, it can be used to buy stocks or ETFs on the same day. Usually, funds can be withdrawn from securities accounts to bank cards at T+ 1
9 transaction flexibility
Etf-linked funds are redeemed only after the market closes on the day of application according to the net value of fund shares. Etf funds can be traded in the day, and some of them can be traded in T+0, so they can construct and implement rich trading strategies.
The above are some differences between etf linked funds and ETFs, so you can pay attention to them.