In the field of index funds, ETF is undoubtedly a "star", its full name is traded open-ended index funds, is a highly efficient indexed investment tools, so what is the etf fund?
What are the ETFs?
Generally, etf funds can be divided into three main categories, which are index etf, gold etf and on-market currency etf. Different categories contain many funds.
1. Index etf: the more famous index etf are 50etf, 300etf, 500etf, deep 100etf, H-share etf and so on.
2. Gold etf: Gold etf includes Boshi Gold, Gold Fund, Guotai Gold etf, Hua'an Gold etf and so on.
3. On-market currency etf: On-market currency etf include Huabao Tianyi, Yinhua Ri Li, Jianxin Tianyi, Wealth Treasure E, Wealth Management H, China Merchants Express, Trading Currency, Margin and so on.
What are the advantages of etf funds?
1. Diversify and reduce investment risk
Buying an ETF is equivalent to buying an index portfolio, the increase in the number of underlying can reduce the impact of the fluctuations of a single underlying on the overall portfolio, while at the same time through the different underlying the different impact of the market risk to reduce the volatility of the portfolio.
2. The ETF's underlying index is highly transparent
The ETF adopts passive management, which completely replicates the constituent stocks of the index for the fund's investment portfolio, and the fund's holdings are quite transparent, which makes it easy for investors to understand the characteristics of the investment portfolio and to fully grasp the status of the investment portfolio.
3. ETFs can be listed and traded
ETFs are traded continuously during trading hours like stocks, and investors can buy and sell according to the instantly revealed trading prices, thus better grasping the transaction prices. For investors in ordinary open-ended index funds, where intraday gains are meaningless and redemption prices can only be calculated based on closing prices, the ETF's features help investors capitalize on intraday gains. As the exchange displays IOPV (net value valuation) once every 15 seconds, this IOPV instantly reflects the changes in the fund's net value brought about by the rise and fall of the index, and the ETF's secondary market price changes along with the changes in IOPV, so investors can sell ETFs in the secondary market in time when the index rises in the intraday session to reap the benefits brought about by the index's intraday rise.
4. Low Transaction Cost
There are no subscription and redemption fees for on-market trading of ETF funds. Transaction fees are charged in accordance with the trading commissions of securities companies and there is no stamp duty. If you buy an ETF fund on the SSE, the transaction fee is not higher than 2.5 per cent of the transaction amount and not less than 0.085 per cent, starting from 5 yuan. If it is an ETF fund of SZSE, the transaction fee is not higher than 2.5‰ of the transaction amount and not lower than 0.1375‰. In addition, the cost of indexed investment transactions and management fees are lower, the manager of the ETF will only adjust the portfolio according to changes in the index components, do not need to pay for investment research and analysis costs, so the management costs are lower; on the other hand, the index investment tends to long-term holding of purchased securities, different from the active management of the fund, the turnover rate is lower, so the cost of trading is lower.
What are the etf funds? Recently, new energy themed ETFs, new material themed ETFs, and Chinese internet ETFs have continued to trade in the market, and people's attention to ETFs is growing. Nevertheless, investors still need to consider the general market risk, as well as the sector rotation effect. Investors are advised to carefully assess their own risk tolerance and purchase with caution.