What is an ETF? What does ETF mean? Today I will take you to learn about it. I hope it will be helpful to your investment.
ETF is the abbreviation of English Exchange Traded Fund, and its Chinese meaning is: traded open-end index fund.
ETF is an open-ended securities investment fund product listed and traded on an exchange. The trading procedures are exactly the same as stocks.
The assets managed by ETFs are a basket of stock portfolios. The types of stocks in this portfolio are the same as the component stocks included in a specific index, such as the Shanghai Composite 50 Index. The number of each stock is consistent with the proportion of the constituent stocks of the index. ETF trading
The price is determined by the value of the basket of shares it owns, known as the "unit fund's net asset value."
(Source: Stock Learning Network www.8}gp8.cn) ETF is a hybrid special fund that overcomes the shortcomings of closed-end funds and open-end funds while integrating the advantages of both.
ETFs can track a specific index, such as the Shanghai Composite 50 Index; unlike open-end funds that use cash to subscribe and redeem, ETFs use a basket of index constituent stocks to subscribe and redeem fund shares; ETFs can be listed and traded on exchanges.
Because ETFs are easy to understand and have high market acceptance, since the first ETF product was launched in the United States in 1993, ETFs have developed rapidly around the world.
Over the past 10 years, 12 countries (regions) around the world have launched more than 280 ETFs, with assets under management reaching more than 210 billion US dollars.
ETFs, like the closed-end funds we are familiar with, can be traded on exchanges in the form of small "fund units"; similar to open-end funds, ETFs allow investors to subscribe and redeem continuously.
However, when ETFs are redeemed, investors receive not cash, but a basket of stocks; at the same time, subscription and redemption are only allowed after reaching a certain scale.
⑴Compared with closed-end funds: Similar points: They can also be listed and traded on exchanges, just like stocks, and can be traded at any time during the day. Different points: ①ETFs are more transparent.
Since investors can subscribe/redempt continuously, fund managers are required to publish their net worth and investment portfolio more frequently.
② Due to the continuous subscription/redemption mechanism, theoretically there will not be a large discount/premium between the net value and market price of ETFs. ⑵ Advantages compared with open-end funds: ① Generally open-end funds can only be opened once a day.
Investors have only one trading opportunity per day (i.e., subscription and redemption); ETFs are listed on the exchange and can be traded at any time during the day, which is convenient for transactions.
② Open-end funds often need to retain a certain amount of cash to pay for redemptions, while ETFs deliver a basket of stocks when redeemed, without the need to retain cash, which is convenient for managers to operate and can improve the management efficiency of fund investment.
Advantages of ETF: 1. Diversify investment and reduce investment risks. When investors purchase a unit of ChinaAMC-SSE 50 ETF, they are equivalent to purchasing all the stocks in the SSE 50 Index according to their weight.
2. Features of both stocks and index funds 1) For ordinary investors, ETFs can also be bought and sold in the secondary market of the exchange after being split into smaller trading units like ordinary stocks.
2) Make money by making the index. Investors no longer need to study stocks and worry about stepping on landmine stocks; but since there is currently no short-selling mechanism in my country's securities market, it is still necessary to lose money if the index falls.
? 3. Combining the advantages of closed-end and open-end funds. I believe that through the above study, you must have an understanding of this knowledge point. I hope you can learn more about this knowledge, so that you can be a fish in water in the market.