1, different investment strategies. Index etf is a transactional open index fund, whose goal is to track the performance of specific indexes, such as Shanghai and Shenzhen 300 and Shanghai 50 Index. Ordinary funds are mostly actively managed funds, and the goal is to obtain a rate of return that exceeds the market index, such as stock funds and hybrid funds.
2. Different transaction methods and fees. Index etf can be traded on the exchange in real time like stocks, while the liquidity of ordinary funds is relatively poor, especially closed-end funds can only be purchased and redeemed during the opening period. Therefore, index etf is more suitable for short-term trading and arbitrage, while ordinary funds are more suitable for long-term holding and fixed investment. In addition, the transaction cost of index etf is generally lower than that of ordinary funds, because its management cost is lower and there is no need to pay the subscription redemption fee.
3. The investment income is different. The performance of index etf depends on the performance of the tracked index. When the index goes up, the etf goes up, and when the index goes down, the etf goes down. The performance of ordinary funds depends on the investment ability and market judgment of fund managers. If the fund manager can choose high-quality investment targets or grasp the market trend, then the fund's income may exceed the index performance, and vice versa. Generally speaking, the investment risk of index etf is more dispersed, while the income potential of ordinary funds is greater when the market is good.
4. The right investors are different. Index etf and general fund are suitable for different types of investors. If investors don't know much about the market or have too much time to study, they can choose index etf to realize passive investment and buy and sell regularly. If investors have a certain understanding of the market, or have more time to study, they can choose ordinary funds to realize active investment. In addition, the selection range of index ETFs is different from that of ordinary funds, and there are fewer types of ETFs available in the market than ordinary funds.