How ETFs differ from LOF funds

The similarity between Listed Open-End Fund (LOF) and ETF is that both allow two trading channels: one is to buy and sell ** shares in the secondary market, and the other is to subscribe and redeem ** through subscription and redemption** brokers, but there are many differences in specific product features and trading methods.

The vast majority of ETFs are exponential****.

LOF variety.

Management fees. The ETF is low, and the management fee is only about one-third of the ordinary ****.

1. One-half of the ordinary index**.

The LOF is high, such as the existing active management **** rate in China's mainland is generally above.

Portfolio transparency.

ETF High, Daily Announcement Portfolio.

The LOF is low, and the top 10 holdings are announced every quarter.

Subscription and redemption. ETFs use a basket of shares in exchange.

LOF adopts cash subscription and redemption method.

Transaction fees. The ETF is low, not higher than the closed-end ** commission level (LOF is high, such as the existing **** general subscription fee in mainland China, and the redemption fee is the connection between the two trading channels.

ETF arbitrage trades can be completed on the same day.

It takes 2 business days for LOF to be transferred to hosting.

For ordinary investors, since the minimum subscription unit of an ETF is generally 500,000 to 1 million shares, if it does not meet the requirements, it can only pass the secondary market **ETF shares. But LOF will not have such a limitation.

Generally, the couples that can be found on the Internet will not be repeated here.

Both can be purchased and redeemed in the primary market or bought and sold in the secondary market. There is both net worth and ** that is traded on the secondary market.

The biggest difference between them is whether or not they track the index! ETFs** track indices.

That is, the trading index is open**, the ETF is an open-ended ** that tracks an index and can be listed on the exchange**, and the LOF** is listed to the open**.

It is a type pioneered in China, the subscription and redemption of ETF can only be carried out on the exchange, and can only be traded on the floor, and LOF can be carried out on the exchange or at the distribution outlets.

Using "in-kind subscription, in-kind redemption", the investor subscribes for a basket of **, and the redemption is also a basket **, and the LOF ** subscription may be a basket **, and the LOF redeems the actual cash.

There are six main differences between ETFs and LOFs:

1. The meaning is different. ETFs, or Index Open**, are open-ended ETFs that track an index and can be listed on an exchange. LOF** is a type of listing that is open to the public, which is the first type of ETF in China, and it is also the sinicization of ETF**.

2. The places for subscription and redemption are different. Both ETFs and LOFs combine the characteristics of closed-end and open-ended, and can be redeemed in both the primary market3 and the secondary market. However, the places of subscription and redemption are different.

ETF subscription and redemption can only be carried out on the exchange, that is, it can only be traded on the exchange, and LOF can be carried out both on the exchange and at the distribution outlets.

3. The subject matter of subscription and redemption is different. ETFs adopt "in-kind subscription and in-kind redemption", investors subscribe to a basket**, and redeem a basket**. LOF** may subscribe to a basket**, but the redemption is cash.

4. The transaction limit is different. The threshold of ETF is high, the minimum transaction requirement is more than 500,000 shares, only investors with a large amount of funds can participate, LOF has no special requirements for subscription and redemption, and ordinary investors can also participate.

5. Different investment strategies. ETFs** track a certain index, for example, the SSE 50 ETF tracks the SSE 50 index and completely replicates the constituent stocks of the SSE 50, so it is a completely passive investment method. LOF is just an ordinary open investment that can be listed on the exchange, and the act can be relatively simple.

If you are optimistic about the relevant open-ended, such as an open-ended company of a certain company, it can be both passive investment and active investment.

6. The frequency of net worth** is different. In the secondary market, ETFs** are available every 15 seconds****, and LOFs are offered once a day, or several times a day.

How to invest with ETFs and LOFs?

For LOF, for investors, you can buy it as if you were buying a closed-end **, or you can buy it at the time of its issuance. Secondly, more aggressive investors can also carry out some ** operations. Of course, this must be carried out on the premise of having sufficient confidence in the ** net value, because after all, LOF publishes the net value once a day.

For ETFs, investors should make some choices, such as choosing products and timing. First of all, choose the right ETF product for yourself. Second, choose the timing.

The subscription and redemption venues are different: the subscription and redemption of ETFs** can only be carried out on the exchange, and can only be traded on the exchange; LOF**, on the other hand, can be traded on exchanges and outlets.

The target of subscription and redemption is different: ETF** physical subscription, physical redemption, what is subscribed, what is redeemed; The LOF** may subscribe for a basket**, but the redemption is cash.

Trading restrictions are different: the threshold for ETF trading is relatively high, with the minimum trading threshold being 500,000 shares; LOF** has no special requirements for subscription and redemption, and ordinary investors can also participate.

The frequency of NAV** is different: in the secondary market, ETF** is offered every 15 seconds****; LOF**once a day or several times a day**.

1. The places for subscription and redemption are different.

The subscription and redemption venues of ETF** and LOF** are different, although both ETF** and LOF** have the characteristics of both closed** and open-ended**. However, the subscription and redemption of ETFs** can only be carried out on exchanges, that is, they can only be traded on the exchange; LOF** can be carried out both on exchanges and at distribution outlets.

2. The subject matter of subscription and redemption is different.

In addition to the different places of subscription and redemption, ETF** and LOF** also have different subscription targets. Among them, the ETF adopts "in-kind subscription and in-kind redemption", and investors subscribe for a basket of **, and the redemption is also a basket**. LOF** may subscribe to a basket**, but the redemption is cash.

3. The transaction limit is different.

In terms of trading limits, there is also a big difference in ETF**lof**. Compared with LOF**, ETF** has a higher threshold, with a minimum trading requirement of more than 500,000 shares, and only investors with a large amount of funds can participate; LOF has no special requirements for subscription and redemption, and ordinary investors can also participate.

4. Different investment strategies.

In terms of investment strategy, we can also see the difference between ETF** and LOF**. Generally speaking, ETFs** take a completely passive investment approach, while LOFs are just ordinary open-ended investments that can be listed on exchanges, which can be both passive and active.

5. The frequency of net worth** is different.

In the secondary market, ETF** is updated every 15 seconds****, while LOF** is different, it is 1 time a day, or several times a day.

**Under different sales channels, the relevant handling fees are also different, and it is best to choose a transaction method with a lower rate, so do you know how much the transaction fee is in the market? What is the difference between on-field and off-field?

Floor Trading:

The floor trading price is real-time, that is, the ** you bought at that time is how much is how much, and the ** transaction is the same reason. Like the over-the-counter subscription, the on-site purchase can also be dividends, but there is a difference, the ** dividend purchased on the market can only be cash dividends, and cannot be reinvested in dividends, while off-site dividends can be reinvested. It can be redeemed, purchased on the market, or redeemed on the market, and the redemption is based on the net value of the day announced by the company after the market closes**.

**(** method) is different from subscription (** method), selling and redeeming.

Advantages of Floor Trading:

First, the transaction fee is low, and the entry and exit fees are only, which is much cheaper than that of banks and online direct sales; Second, the funds arrive quickly (available on T day, T +1 is desirable), and the time cost and opportunity cost are more advantageous; Third, the transaction method is flexible and convenient, you can trade in the business department of the company, and you can use the network to operate at home or in the office; Fourth, it is more conducive to band operation: seize opportunities in time and quickly avoid risks.

Calculation of rates for on-site and off-site:

1) Field**: In fact, it is **transaction, and the rate is generally waiting, with a minimum of 5 yuan for a single transaction.

Calculation formula: Assuming that the total fixed investment amount is A, and the single fixed investment is B, the current rate is generally 10,000 3, because the single fixed investment amount is generally less than 10,000 yuan, so the minimum 5 yuan is calculated. ）

The investment fee is: a b*5

2) OTC**: Now all platforms basically have the problem of 1% off the rate, which is about 1,000 and the redemption fee is thousand, and the redemption fee is free for more than two years.

Calculation formula: Assuming that the total investment amount is A, and the single investment is B, ignoring the problem of no redemption fee, the investment fee is: A*

Based on the above two points, the preliminary estimate is that when b》=, it is cost-effective to purchase the ** rate in the market.

In fact, considering the initial investment, there is a problem of no redemption fee for more than two years, and when the fixed investment amount is less than 1,500 yuan, it is more cost-effective to purchase over-the-counter ** in terms of rate. Instead of buying the market ** is the cheapest as some authors say.

LOF** is the first of its kind on the Shenzhen Stock Exchange, and ETF** is a common ETF in the world, which is available in every country.

They are all traded in real time, but LOF** can be subscribed over-the-counter to on-market trading, or on-exchange** to over-the-counter redemption.

There are many LOF, and ETF products are not actively traded, and the daily trading is scarce, resulting in great fluctuations in net value.