LOF refers to listed open-end funds and ETF refers to transactional open-end index funds. They are two types of open-end funds listed and traded, both of which can be purchased, redeemed and traded on the market, and both have arbitrage opportunities on and off the market, with little difference in opportunities and risks. However, LOF is very different from ETF.

First, the redemption mechanism is different. ETF generally requires investors to apply for physical redemption with a basket of constituent stocks; LOF, like ordinary open-end funds, determines the consideration according to the net value of fund shares and adopts cash. Redemption of physical redemption varieties such as stock ETF and bond ETF is confirmed immediately, and investors can sell the shares acquired on the same day in the secondary market; The purchase of all-cash alternative redemption varieties such as cross-border ETF and gold ETF is usually confirmed on T day, and can be sold or redeemed on T+ 1 day. LOF subscription is confirmed on T+ 1 day, and can only be sold or redeemed on T+2.

Second, product transparency is different. Etfs usually invest according to the constituent stocks and weights of the index, and the positions are close to 100%. Although the index LOF is also allocated according to the index, it usually keeps no less than 10% in cash to cope with fund redemption. ETF fully discloses its portfolio in the daily redemption list, while LOF only needs to disclose it once every quarter. ETF provides the fund reference net value once every 15 seconds, and LOF discloses the net value once a day.

Third, the efficiency of tracking index is different. In practice, ETF physical redemption is beneficial to the net value tracking index. For example, in a bull market, ETF will not dilute the original fund income because of the continuous influx of new subscription funds, and will also have an impact on the net value tracking index.