What are the seven investment misunderstandings of p>ETF funds?
Misunderstanding 1: Only for large households. Many investors mistakenly believe that the investment threshold of ETF is too high, and the minimum redemption units range from hundreds of thousands to millions. The physical redemption method of a basket of stocks is complicated and only suitable for investors with large funds. In fact, ETF shares can be listed and traded like stocks without stamp duty. With one hand (1 shares) as the starting point, investors with small funds are fully capable of participating.
Myth 2: You can only make profits in a bull market. With the expansion of ETF application, many application strategies have nothing to do with the bull-bear stage of the market. For example, the band operation strategy with fluctuation means that there is a profit opportunity, the matching trading strategy with price difference change means that there is a profit opportunity, and the ETF, which is included in the margin trading target, sells short in the market decline.
Myth 3: Only used for speculation. ETF has both trading and configuration functions. As an index fund, ETF can perfectly shoulder the mission of medium and long-term index investment and portfolio asset allocation, and the transaction cost and tracking error are much lower than those of ordinary open-end index funds. With the introduction of innovative products such as cross-border ETFs, fixed-income ETFs, commodity ETFs and even leveraged ETFs, ETFs can provide more abundant medium-and long-term asset allocation solutions.
myth 4: only interested in arbitrage trading. Instantaneous arbitrage in the primary and secondary markets is only one of many application strategies of ETF, and the profit margin is very small. In addition to band operation and asset allocation, many strategies such as intraday T+ trading, industry rotation, style rotation, market neutrality, long/short and so on have been applied in actual combat. Even in arbitrage trading, multi-strategy event arbitrage, spot arbitrage and cross-market arbitrage continue to expand the application boundary of ETF.
myth 5: only think that the risk is extremely high. Stock ETF operates almost in Man Cang, and its net value fluctuates greatly. However, ETF can be regarded as a "super stock" composed of many constituent stocks. Compared with a single stock, ETF can fully disperse risks. For investors with small capital or weak stock selection ability, ETF is just an excellent tool to disperse the unsystematic risks of individual stocks.
Myth 6: Focus only on advanced strategies. Some investors believe that the more complex the ETF trading application strategy, the more sophisticated the trading system and the higher the trading frequency, the higher the profit probability and the higher the income. However, practice has proved that the complexity of ETF trading strategy and trading frequency are not necessarily proportional to the rate of return. In actual combat, ordinary investors also have many opportunities to obtain satisfactory returns by analyzing simple technical indicators and even using simple fixed investment strategies. [4]
Myth 7: Share changes are often mistaken. It is easy for some investors to misread the share change of ETF after subscribing to ETF during the issuance period, and feel that the scale of ETF subscribed by them has suddenly shrunk dramatically. In fact, the share of ETF when it was established is different from the share announced after its operation.