There are two kinds of index funds. One is an ordinary open-end index fund, which can be purchased directly at the counters of banks, securities companies or the direct sales center of fund managers, just like other open-end funds. The minimum capital requirement depends on the regulations of each fund management company. The other is ETFs (Exchange-traded Fund), which is listed on the exchange, and ordinary investors can go to the sales department of securities companies to trade like stocks.
Types of index funds:
1. closed index fund. You can trade in the secondary market, but you can't apply for redemption.
Second, the general open index fund. You can't trade in the secondary market, but you can purchase and redeem it.
Third, the index ETF fund. ETF can be traded in the secondary market, and can also be purchased and redeemed, but the purchase and redemption are all in the form of portfolio securities.
Fourth, the index LOF fund. It can be traded in the secondary market, or it can be purchased and redeemed.
Index fund classification:
1. Completely duplicated index fund.
This kind of index fund generally replicates the index 100% and adopts a completely passive strategy. We can illustrate, for example, that if you are a student and you want to track the performance of another student who is particularly good at learning, assuming that you can track the performance of the first place in the class, there are two ways to achieve it. The first method is to ensure that every subject is close to or consistent with his grades, which is equivalent to complete plagiarism.
2. Enhanced index fund.
Still the above example. In the second way, you may think that your advantage in some courses is not obvious than that of the first student, but you have other courses that are better than that student, or at least have similar advantages, so you can choose other courses instead of following a certain part of that student's courses to get similar results. This is equivalent to adding active investment strategy on the basis of passive investment, which is an enhanced index fund.
The subscription and redemption of index funds can be operated by brokers and banks (including online banking).