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ETF is a popular commodity that has been very popular recently, and many domestic investment trusts have also launched new ETFs. ETF securitizes the index, the investment method is exactly the same as that of stock, and there is no need to open another account. All the delivery, transfer, trading, and registration process of ETF is the same as that of stock. Investors only need to use the original stock set to save After the ETF is folded, the deposit and fold of the ETF can be completed. Simply put, if you buy an ETF like a stock, if the index goes up, the ETF will go up; if the index goes down, the price of the ETF will go down.
The full name of ETF is "(Exchange Traded Fund)", which means "exchange-traded fund". Also referred to as "index stock funds".
The so-called fund that can be traded on the stock exchange means that we can place an order to buy and sell through the securities account.
It is described that fund investment is like a vegetable basket. ETF issuers select high-quality and good vegetables (blue-chip stocks) in the market into the basket, and select all suitable high-quality dishes of fish, meat, eggs, milk, and milk so that retail investors do not have to worry about which dishes to buy in the vegetable market? What other dishes are better and fresher?
Just buy the "basket of vegetables" carefully selected by the manager and go back. This is what is often referred to as a "basket of marketable securities" in the investment market.
It is up to professional managers to decide what projects and industries to buy now?
Like group buying, it collects investors' funds and entrusts professional investment institutions to manage and operate investment tools. Investors share risks and share investment profits with each other.
ETFs (index funds) and mutual funds are both funds, which means that they are composed of a "basket of securities". The securities list of an ETF (index fund) is selected "according to the index constituents", but the securities list of a "mutual fund" is selected by the fund management team.
The biggest difference between the two is that most ETFs are passive investment methods, which follow the rules of an index to determine the stock selection and weighting, while mutual funds are subjective investments, and fund managers decide what to buy now and how much weight to buy. In most cases, mutual fund holdings are more concentrated, while ETFs are more decentralized. The impact of this on performance is that one fluctuates big and the other fluctuates small.
If you have bought a fund, you will know that the subscription and redemption time of the fund is relatively long, which is a problem with the fund structure. The fund is a "thrust structure". It entrusts the money to the investment trust company that issues the fund through trust regulations. After the investment trust company receives our money, it will use it to buy stocks; when we want to redeem the fund, the investment trust company needs to sell the stock first. Then settle the money to us. Therefore, the transaction time is longer.
The ETF is the direct purchase and sale of the ETF stock index target, and the target itself represents a basket of stocks.
Because fund management requires a professional team to manage, the management fees of mutual funds are usually high. Each mutual fund will charge a "management fee" (some called "manager fee", some called "custody fee"), which is about 1.5% to 3% of the annual investment amount. The management fee of ETF is relatively low, about 0.1%~0.5% of the investment amount each year.
Managers take the initiative to adopt various strategies, with the purpose of "beating the market", selecting investment targets, deciding when to enter and exit the market, and expecting to obtain a better rate of return than "the overall market". However, it is also possible that the performance is worse than the market due to the improper operation of professional managers, fraud, and other human factors.
The so-called ETF is a "mutual fund that passively tracks an index", which aims to achieve the same return as the "big market". Therefore, the impact of these two fund forms on performance is that one is judged by human operation and fluctuates greatly, and the other is not easy to follow the index to rise and fall.
Finally, I would like to remind everyone that ETFs and funds are both diversifying investment tools. Does the difference lie in whether you want to invest more actively, pursue the results of active investment, or passively invest in the same investment as the broader market? After all, some ETFs and funds are very high-quality, with high returns, but there is also consistently poor performance.
