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What Is ETF?

2010/6/8 17:46:00 31

ETF Exchangetraded Funds

ETF: pactional open-ended index fund is the abbreviation of Exchange Traded Funds.


It is managed by passive means and can be traded on exchanges.

For ETF fund shares, investors can conduct convenient pactions in the two tier markets of exchanges as closed-end funds.

In addition, it can purchase and redeem like an open-end fund.


The difference is that its purchase is in the form of a basket of shares in exchange for ETF share, and when it is redeemed, it is also exchanged for a package of shares instead of cash.

This trading system enables the fund to have a arbitrage mechanism between the one or two markets, which can effectively prevent the close discount of similar closed-end funds.

ETF paction price depends on the value of the stock it owns, that is, the net asset value of the unit fund.

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