As we all know, ETFs have become one of the hottest investment targets in the world, and things that can make money always have their own spreading effects, and our domestic ETF market share is also growing rapidly at lightning speed. But many investors don't know much about ETFs, so what exactly is an ETF?
1. What is an ETF**
ETF: Exchange Traded Funds, Chinese name is exchange-traded open-ended index**. It is an open-ended index listed and traded on the exchange, which has the advantages of **, open-end index** and closed-end index**, and is an efficient indexing investment tool.
To put it simply: transactional means that ETFs can be bought and sold like ETFs, which we usually call floor purchasesThe simple understanding of open-ended is that investors can subscribe or redeem ** shares from the ** management company, that is, over-the-counter subscription and redemption.
The types of domestic exchange transactions** are as follows:
Depending on the underlying asset, ETF products mainly include **ETF, bond ETF, **ETF and currency ETF. ETFs are invested in ETFs that are listed and traded on exchanges. ETFs have the advantages of both ** and **, so they have the advantages of convenient, fast and low-cost investment. Take the CSI 300 ETF as an example, because the ETF's **trend is consistent with the CSI 300 Index, investors are trading one ETF is equivalent to buying and selling 300 excellent ETFs at the same time**.
*ETFs can be broadly divided into:
Broad-based index ETFs, sector index ETFs, thematic index ETFs, strategy indices (smartbeta) ETFs
Broad-based index ETF: ETF tracks composite indices such as CSI 300, SSE 50, CSI 500, and CSI 100, such as 100 ETF (**512910);
Industry Index ETF: The tracking index is divided into different industry indices according to certain standards, including information technology, financial real estate, major consumption, medicine and health and other industries, and representative products such as information technology ETF (**159939);
Thematic index ETFs: Common thematic indices include environmental protection index, pension index, Belt and Road theme index, etc., and representative products such as environmental protection ETF (**512580).
SmartBeta ETF: Common strategy indices include dividend indexes, fundamental indices, etc., representing products such as dividend ETFs (**510880).
In addition, there are ** ETFs and currency ETFs. In addition, ETFs can also be divided into single-market ETFs, cross-market ETFs, and cross-border ETFs according to different investment markets.
2. Characteristics of ETFs**
1) Transparent performance and can be checked at any time.
ETFs track the stock selection rules of the index, and the index weights are fully public, so there is no need to worry about the moral hazard of the manager. For example, CSI 300**1%, then the corresponding CSI 300 ETF** will also be about 1%. You can clearly see whether the rise and fall of your investment** is about the same as the corresponding index.
2) Easy redemption and high utilization.
After the ETF** is sold, it can be on the same day or the next trading day**other exchange**or**. If you don't invest anymore, you can withdraw your money on the next trading dayOTC active** may take 2-7 business days to withdraw. In addition, the over-the-counter** has to set aside 5% of the funds to deal with the redemption of customers, so the utilization rate of funds is not very high, while the on-exchange ETF** can use 100% of the funds for investment, and the return will be higher in theory.
3) Low transaction fees and high frequency to save money.
The subscription fee for over-the-counter ** is generally between 1% and 15%, even if most of the ** trading platforms will give a discount, the discount is 01%-0.15% and the redemption fee is often 0About 5%, generally buying and selling at a time may need at least 05% fee. For ETF**, ** and when selling can pay 1/10,000 respectively, the handling fee is much less than one-tenth of the market**, and very few brokerages can still do it0 parts per 10,0005，This is more money-saving for high-frequency trading, and at the same time makes a little money, and you can sell it immediately if you are worried about **, and you don't have to worry about the handling fee not being earned.
4) Flexible trading and convenient arbitrage.
ETF**Since investors can either trade in the secondary market, or directly subscribe and redeem in a package with the manager, if the gap between the two markets is relatively large, someone will go to one market to buy low and sell high in the other market. It is the existence of this arbitrage mechanism that inhibits the deviation between the secondary market and the net value, so that the secondary market transactions are basically consistent with the net value.
5) Track the index and diversify the risk.
Investors buying a ** unit of ETF is equivalent to buying and selling the index it tracks, and can obtain basically the same income as the index, while diversifying the risk and eliminating the problem of ** choice.
3. ETF Trading Rules
ETFs combine the operational characteristics of closed-ended** and open-ended**, on the one hand, they can be bought and sold in the secondary market like closed**, and on the other hand, they can be subscribed and redeemed like open**. So generally speaking, there are two main ways to invest in ETFs: subscription and redemption and buying and selling transactions.
1.Subscription and redemption (refers to the subscription and redemption through a A-share account or ** account in the primary market).
In layman's terms, you need to exchange a basket of ** or cash, similar to bartering, but this operation mechanism can ensure that the ETF has a small tracking error. However, the threshold for subscription and redemption is very high, and the minimum subscription and redemption unit of exchange trading is generally 500,000 or 1 million shares, and the method of share subscription and share redemption is adopted, and the application shall not be revoked after submission, and it is often hundreds of thousands of millions, which is not suitable for ordinary investors, so I will not repeat it here.
2.Buying and selling transactions (trading through a A-share account in the secondary market, that is, ETF trading through ** account like buying and selling**, there is no capital requirement, as long as the ** account is normal), you can buy and sell).
Trading hours: Shanghai and Shenzhen** stock exchanges, Monday to Friday 9:30-11:30 a.m. and 1:00-3:00 p.m.
Trading method: Place an order through any ** company during the trading hours of the trading day.
Account opening: There is no need to open a separate account to buy and sell ETFs, and investors can trade ETFs if they have an A-shares** account.
Trading unit: 100 shares are 1 lot, the declared quantity is 100 shares or their integer multiples, and the part less than 100 shares can be sold.
*Minimum change unit: 0001 yuan, ** exchange after the opening of the market according to the subscription, redemption list and the real-time transaction data of each ** in the portfolio**, calculate and release the ** share reference net value every 15 seconds for investors to trade, subscribe, redeem ** share reference, the opening reference price on the first day of listing is the previous working day** share net value.
Limit on price change: 10%.
The vast majority of ETFs use the T+1 trading mechanism, and the ** ETFs are all T+1 trading mechanismsSome ETFs support T+0 trading, such as bond ETFs, **ETFs, cross-border ETFs, and currency ETFs
4. ETF trading fees
In terms of transaction fees, OTC** is mainly reflected in the redemption fee, while ETF** is the transaction fee.
ETFs are traded over-the-counter and charge subscription fees (1.)5%) and redemption fee (holding ** for less than 1 year 0.).5%）。In general, the total cost of over-the-counter transactions is about 2%, and we usually use every day**, Alipay can buy over-the-counter**, but the transaction fee will be much higher than that of the market, so now more and more people are more willing to register **account to buy on-site**.
If the ETF is subscribed and redeemed on the floor, the subscription fee and redemption fee will be charged, which is subject to the company's regulations. There is no stamp duty on the transaction of ETF**, the fee standard of each brokerage is different, and the transaction commission is generally the same as **, but it can be reduced separately with the account manager, and most brokerages can be adjusted to 1/10,000, and very few can do it0 parts per 10,0005