Difference: ①ETF is more transparent. Since investors can purchase/redeem continuously, the frequency of asking fund managers to announce their net worth and portfolio is also accelerated accordingly.
(2) Due to the existence of the continuous subscription/redemption mechanism, theoretically there will not be too much discount/premium between the net value of ETF and the market price.
Compared with open-end funds, ETFs have two advantages: First, ETFs are listed on exchanges and can be traded at any time within one day, which is convenient for trading. Open-end funds can only be opened once a day, and investors only have one trading opportunity every day (that is, subscription and redemption); Second, ETF redeems by delivering a package of shares, without keeping cash, which is convenient for managers to operate and can improve the management efficiency of fund investment.
Open-end funds often need to keep some cash for redemption. When investors of open-end funds redeem their fund shares, they often force fund managers to constantly adjust their investment portfolios, and the resulting taxes and losses of some investment opportunities are borne by those long-term investors who have not made redemption requests. This mechanism can ensure that when some ETF investors ask for redemption, it will not have much impact on long-term ETF investors (because the redemption is stocks).
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