ETF question1:what exactly is ETF?
The full name of ETF is "exchange traded fund", abbreviated as "ETF" and literally translated as "exchange traded fund". When SSE launched 50ETF, the Chinese name of ETF was determined as "transactional open index fund". This Chinese name accurately and completely reflects the connotation and characteristics of ETF: First, it tracks a fund with an index for indexed investment, such as SZSE 100ETF fund, with the constituent stocks of SZSE 100 as the tracking target. If you buy ETF with SZSE 100, you will get basically the same rate of return as SZSE 100. Second, it is an open-end fund, which is listed on the exchange. Investors can buy and sell ETFs as simply as stocks and closed-end funds. The transaction cost of Shenzhen Stock Exchange 100ETF is low, and stamp duty is exempted, and the commission for a single transaction does not exceed 0.30% of the transaction amount.
How is the price of ETF determined?
ETF combines the advantages of closed-end funds and open-end funds, and can be traded in the secondary market. At the same time, it solves the discount problem of closed-end funds through arbitrage mechanism.
Investors buy and sell 100ET F at the real-time transaction price displayed by Shenzhen Stock Exchange, which is different from buying and selling other open-end funds with unknown net value. The trading price of SZSE 100ETF fluctuates slightly based on its share reference net value, and is calculated once every 15 seconds, which is displayed in the exchange system and can be viewed by investors on the market display screen. Trading depth 100ETF trades at the real-time display price, which is not completely equal to the reference net value of the fund, but it is not as discounted as the closed-end fund.