1. What is an ETF linked fund?
Linked fund refers to a fund that invests most of its assets in an ETF (target ETF) that tracks the same target index, closely tracks the performance of the target index, pursues the minimization of tracking deviation and tracking error, and adopts an open operation mode. As an investment way to realize the synchronous growth with the market, index funds have attracted more and more attention and favor from investors.
In the past, there were four ways to invest in index funds: open index funds, closed index funds, ETF funds and LOF index funds. Now, there is a fifth way, which is to connect funds.
Second, the difference between ETF linked funds and FOF funds:
1. From the investment target point of view, ETF linked funds take the corresponding target ETF as the investment target, so the expected annualized expected return and risk characteristics also come from the target ETF. However, FOF generally binds multiple funds together, which is equivalent to investing in multiple funds at the same time. In order to avoid risks, in addition to stock funds, a certain number of money or bond funds are usually allocated, and the expected annualized expected returns and risks are relatively low.
2.ETF linked funds and FOF also have different regulations on management fees. According to the regulations of the CSRC, in order to avoid repeated charges, fund managers and custodians may not accrue management fees and custody fees for investment target ETFs in ETF-linked fund assets; FOF, on the other hand, implements the second charge on the basis of the fund handling fee.
3. The subscription thresholds of 3.ETF and FOF are completely different. Because FOF is issued by financial institutions other than fund companies, the starting point of its subscription amount is basically above 1 10,000 yuan, while ETF-linked funds are independent funds issued by fund companies themselves, and the lower limit of subscription is basically 1 10,000 shares. In addition, FOF has different opening periods, including one quarter, one week and one week, and cannot be purchased and redeemed at other times; ETF-linked funds, like general open index funds, can be traded on trading days.
4. Linked funds are still open index funds, and their investment objective is to fit the expected annualized expected returns of market indexes. It is a passive investment product, which is not much different from the index funds seen in the market. It is also subscribed, purchased and redeemed in banks and other channels. However, this product is an innovative product after all, and its innovation lies in realizing the expected annualized expected return of the index by allocating assets on the designated ETF. This form may further reduce the transaction cost, so as to obtain the expected annualized expected return of the market index quickly and effectively, and at the same time, it also provides investors with diversified investment choices and meets the needs of investors to indirectly invest in the ETF market.
Third, the advantages of ETF linked funds:
1. Low investment cost: Since Linked Fund will not charge investors management fees and custody fees for assets invested in ETFs, repeated charges are avoided; At the same time, as an index fund, the overall cost level of linked funds is relatively low, and low-cost and high-convenience ETF investment methods are adopted for bank investors.
2. It can meet the needs of investors for fixed investment: index funds are one of the most suitable types of funds for fixed investment. After the linked fund is issued, investors can easily make a fixed investment in the bank like other open-end funds and share the risks equally.
3. It can meet the switching needs of investors: after opening the switching business of linked funds, investors can flexibly switch between linked funds and other funds issued by the same fund company according to the expected annualized expected returns and personal preferences at different market stages, and optimize asset allocation, so as to maximize the expected annualized expected returns.