Trading open-end index fund 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. The existence of arbitrage mechanism can make ETF avoid the common discount problem of closed-end funds. Investors can buy ETFs in two ways: after the securities market closes, they can buy from the fund manager according to the net value of the fund on that day (the same as ordinary open-end funds); It can also be purchased directly from other investors in the securities market. The purchase price is determined by both buyers and sellers, which is often different from the net value of the fund at that time (like ordinary closed-end funds).
This kind of fund has a certain capital requirement when purchasing, which is about 50- 1 10,000.