ETF fund is an important part of investment funds, because of the high degree of compatibility with the securities market, by many investors, so what are the advantages and disadvantages of ETF funds? What are these advantages and disadvantages? Today, I will take you to look at it together.
The advantages of ETF funds
1, low cost
Since the ETF completely replicates the trend of the index, which does not need to spend a lot of human and financial resources to analyze the market to change the configuration, to a certain extent, reduces the cost. Coupled with the reduced reliance on fund managers, index funds in general track objects that are knit together from a number of companies and stocks for better stability.
In terms of fees, ETFs have lower management and custodian fees compared with other funds. For example, the Huaxia SSE 50 ETF fund has a management fee of 0.5 percent and a custodian fee of 0.1 percent. The open-end index fund, on the other hand, has a 1.5 percent fee and a 0.25 percent custodian fee.
2. High liquidity
Ordinary open-ended funds announce their net value once a day, while ETFs refresh their quotes every 15 seconds. It can be traded as fast as stocks, which is more efficient compared with subscribing and redeeming funds at banks.
3. Transparent information
Because the net value fluctuates according to the index underlying, it is a bit more transparent than other funds.
Disadvantages of ETF funds
1, due to the high liquidity, the net value of the rapid changes, easy to make investors buy and sell frequently, resulting in investors can not be held for a long time thus affecting the fund trading, and increase the cost of transactions;
2, liquidity issues, some ETF funds are too small, or too niche, it will result in poorer liquidity, unable to meet investor demand for the fund.
The above content about what are the advantages and disadvantages of the ETF fund said so much hope to help you. Warm tips, financial risk, investment need to be cautious.