What is ETF?

If you are a fund investor, you will definitely check the Fund's net worth. Currently, the first fund in the net worth table is 180etf, and the net worth has already exceeded 5 RMB. What is ETF?

I. ETF Concept

Essentially, ETF is a combination of open-ended Funds and closed-end funds, and it is beyond the technical limits.

The full name of ETF is Exchange Traded Fund. Investors can buy and sell ETF shares in the secondary market, and can purchase and redeem ETF shares from fund management companies, however, the purchase and redemption must be in exchange for the fund share or the fund share (or a small amount of cash) in combination securities ). Because there are two-level market transactions and purchase and redemption mechanisms at the same time, investors can carry out arbitrage transactions when there is a difference between the second-level market transaction price of the ETF and the net value of the fund share.

Features

Feature 1: the first-level market has a high purchase threshold. The first-level market requires at least 1 million ETF subscriptions. For example, the current net worth calculation requires at least more than 0.8 million yuan of funds. Obviously, this is not suitable for general investors. The purchase is not in cash, but with a stock package. For the SSE 50 ETF, investors need to purchase shares in proportion to the purchase and redemption list released before each trading day of Huaxia fund company, and then use these shares (including a small amount of cash) for purchase. If it is to redeem the fund share, investors will eventually get a basket of shares, and at least 1 million shares will be redeemed.

Currently, the purchase and redemption of ETF can only be performed at the designated proxy brokerage counter. Small and medium investors can participate in ETF investment through the secondary market. Just like buying and selling closed-end funds, the service fee is relatively low and stamp duty is not required. The minimum investment share is only 100.

Feature 2: implement a quasi-"T + 0" operation. If an investor buys an ETF fund in the primary market after buying a stock package, the investor does not use the funds to settle the account after the purchase is successful, you can throw it on the secondary market that day to implement the "T + 0" transaction.

In the same way, an investor can buy an ETF in the secondary market and then demand redemption in the primary market. After successful redemption, you don't have to wait for a basket of stocks to arrive at the account, you can throw these stocks, it is also a "t + 0" transaction.

However, investors cannot perform the "t + 0" operation in the same market, that is, the purchase in the first-level market on the same day cannot be redeemed on the same day, and the purchase in the second-level market on the same day cannot be sold. Therefore, an ETF can only be called a quasi "T + 0" operation.

Feature 3: the Unit net worth is equal to 1‰ Of The SSE 50 Index. The relationship between the unit net worth of the SSE 50 Index and the SSE 50 index is very simple, which is 1‰ Of The SSE 50 Index.

The sample stock of the SSE 50 Index (Code 000016) is the largest, most mobile, and most representative 50 stock in the Shanghai stock market. At the same time, these 50 stocks are generally industry-leading blue chip stocks with high market coverage and influence. Currently, the average price-earnings ratio of the 50 Index is less than 15 times.

Looking at the SSE 50 index, we can easily convert the net worth of the 50 ETF. For example, when the certificate 50 Index is 875 points, the net share of the SSE 50 ETF should be about 0.875 yuan, and the certificate 50 Index will rise or fall by 10 points, the net value of the ETF on the SSE 50 Index should rise or fall by about 0.01 yuan. Once the second-level market price is deviated from the net worth, investors with large amounts of funds can carry out arbitrage operations.

Profit Channels

Channel 1: profits with the rise of the index when the Fund-tracked SSE 50 index rises, the Fund's net value and market transaction price will also rise, and investors can sell in the secondary market, or redeem for profit. Therefore, if you are optimistic about the dashboard, but you are not optimistic about the stock, it is better to buy the SSE 50 ETF to share the gains of the dashboard rise; if you want to buy a batch of blue-chip stocks, it is better to buy the SSE 50 ETF for convenience; if you want to purchase a large number of stocks but you are worried about making it difficult to buy, then purchasing the SSE 50 ETF should be a good choice, because it does not need to worry about its liquidity.

Channel 2: Arbitrage when the Fund's net value and market transaction price deviate greatly, the ETF provides investors with arbitrage space, the price difference benefits can be obtained through the gap between the first-level market and the second-level market. For example, when the market price of 50 ETF is higher than the net value of the fund unit, the arbitrage operation method is as follows: "Buy a basket of stocks-> purchase a fund share of the SSE 50 ETF-> sell the fund share in the Secondary Market ". The arbitrage income is equal to the "(second-level market price of the Fund-net asset of the Fund) × number of fund shares-the transaction fee for purchasing the fund shares and selling the stock basket ". However, it is not easy for small and medium retail investors to obtain arbitrage income. First, relying on professional arbitrage software, the cost should be at least RMB 100,000; second, the initial funds for arbitrage should be at least RMB 1 million (the first-level market purchase should start with RMB 1 million ).