First, it can be listed and traded on the stock exchange, and investors can buy and sell ETF shares directly on the stock exchange like trading individual stocks and closed-end funds;
Second, ETF is basically an index-type open-end fund, but compared with the existing index-type open-end fund, its biggest advantage is that it is listed on the exchange and the transaction is very convenient;
Third, its purchase and redemption also has its own characteristics. Investors can only subscribe or redeem ETFs with a basket of stocks corresponding to the index, but not with existing open-end funds for cash subscription and redemption.
Extended data:
Operation of ETF:
① Participants: ETF mainly involves three participants, namely sponsors, trustees and investors. The promoters and founders of fund products are generally stock exchanges or large fund management companies or securities companies. The trustee is entrusted by the promoters to manage and control all the assets of the stock trust portfolio.
Because the index ETF adopts the index investment strategy, unless the index changes, the general trustee does not need to adjust the stock portfolio from time to time, but the trustee who manages the investment company ETF has certain investment decision-making freedom. The trustee is generally a bank, trust, investment company and other financial institutions. Investors are institutions or individuals who buy ETFs.
② Selection and simulation of basic index: Whether ETF of index fund can be successfully issued is closely related to the selection of basic index. The basic index should be widely used by a large number of market participants to reflect its representativeness and liquidity, and the adjustment frequency of the basic index should not be too frequent to avoid affecting the correlation between the index stock portfolio and the basic index.
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