ETF is also called "exchange traded open index securities investment fund" or "exchange traded fund". ETF is a fund that tracks the changes of the "underlying index" and is listed and traded on the stock exchange. ETF is a special type of open-end fund, which combines the advantages of closed-end fund and open-end fund. Investors can buy and sell ETF shares in the secondary market, or purchase or redeem ETF shares from fund management companies, but they must exchange a basket of stocks (or a small amount of cash) for fund shares or a basket of stocks (or a small amount of cash) for fund shares. Because there are both secondary market transactions and subscription and redemption mechanisms, investors can carry out arbitrage transactions when there is a difference between the transaction price in the ETF secondary market and the net value of the fund unit.

For ETF, the exchange displays an IOPV (Individually Optimized Portfolio Value) every 15 seconds, which instantly reflects the changes in the net value of the fund caused by the rise and fall of the index.

ETF combines the trading characteristics of closed-end fund and open-end fund in trading mode, which can be bought and sold on the exchange or purchased and redeemed. There are two ways to buy (subscribe) fund shares, one is cash, and the other is to use a basket of stocks. But when selling or redeeming, investors get a package of shares instead of cash. The biggest function of ETF is that investors can use the characteristics of index futures and commodity futures of this financial product to arbitrage, which is helpful to increase the trading volume of the stock market.

ETF was first produced in Canada, but its progress and maturity are very important in the United States. Take the United States as an example From the end of 1993 to the end of 2003, the assets of ETF funds in the United States increased from $464 million to1509.83 million, equivalent to an increase of 324 times. By the end of June 2004, the total assets of global ETF products reached 246.4 billion US dollars, covering all major securities markets in the world. It is one of the fastest growing financial products in the past 65,438+00 years and has become a popular investment tool.