Before talking about ETF funds, Xiaocai will take you to review the classification of funds. According to the investment scope, we generally divide funds into currency funds, bond funds, hybrid funds and stock funds . From currency funds to stock funds, investment risks is incremental.
1. Background introduction
ETF funds are stock funds. In terms of absolute risk, it is still relatively high, but because currently most ETFs are index funds , relatively speaking, the investment risk is not bad. In terms of investment methods,
stock funds can be divided into passively managed stock funds (also known as index funds) and actively managed stock funds.
The former mainly invests in the index component stocks that are tracked, with a relatively low turnover rate, and there are generally many of these component stocks, such as the CSI 300 Index, whose component stocks are mid-sized A shares of the Shanghai Stock Exchange and Shenzhen Stock Exchange. The 300 most representative stocks with large size and good liquidity can comprehensively reflect the overall performance of the Shanghai and Shenzhen A-share markets.
Actively managed stock funds, where fund managers and fund companies determine their specific investment scope, are relatively risky. The level of most fund managers is also limited. In fact, the returns of many fund managers cannot outperform the market . The indexes tracked by
index funds can basically reflect the trend of the stock market. For example, Shanghai Composite Index generally refers to the trend of the broad market; while CSI 500 Index generally refers to the trend of small and medium-sized caps.
With the development of the economy, the market index will definitely be on the rise, so this is why some people say that buying the index is buying the national destiny. The reason why many investors recommend buying index funds.
2. The definition of ETF fund
ETF’s full name is Exchange Traded Fund, which is traded open-end index fund , and is often called exchange-traded fund. This means that ETFs can be bought and sold at any time and have strong liquidity. The operation of funds such as
ETF is very simple. It is to buy a bunch of stocks and calculate an index based on the weight of the stocks. Buying and selling ETFs is actually buying and selling the total rise and fall of the stocks. If the direction is right, you can make a profit.
At present, the passive income effect obtained by ETFs is very ideal. Most ETFs can outperform the market. After all, leading industries are easier to see than leading stocks.
3. How to trade ETFs
First, you are required to have a stock account. ETFs are similar to stocks and are listed on exchanges. So the trading method is the same as stocks. ETF prices can fluctuate at any time during the session. You can place orders directly in the stock software during trading, so trading is very convenient.
The trading rules are similar to stocks. For example: the market opening hours are 9:30-11:00 am and 1-3 pm on Monday (closed on holidays). When
trades, you place orders through a securities company, and you must open an A-share account or fund account on the Shanghai or Shenzhen Stock Exchange for transactions. The trading unit is 1 lot for every 100 funds, and the net value of fund unit is calculated every 15 seconds. The minimum fluctuation unit is 0.001 yuan, and the price limit is 10%.
There are many ETFs now, but they can be roughly divided into several categories. For example: Shenzhen 100 ETF, small and medium-sized board, GEM and other "broad index" size index ETFs. Or industry ETFs: such as technology ETFs, communication ETFs, financial ETFs, etc. The other is thematic ones, such as deep dividends, leading ETFs, etc. There are also bond ETFs, commodity ETFs, global index ETFs, etc.
In other words, as long as you invest in ETFs, you can invest in stocks, bonds, commodities, etc., and you can even buy not only domestic indexes, but also foreign indexes.
And generally, ETFs implement the T+1 trading system just like stocks. You can buy it on the same day and sell it the next day. However, ETFs that invest in foreign indexes can perform T+0 operations, that is, they can be bought on the same day and sold on the same day.
4. Can you make money by investing in ETFs?
Theoretically, by purchasing ETF index fund and adhering to a fixed investment cycle of 3-5 years, you can achieve an annualized rate of return of about 10% in the long run.
However, in actual operation, you will encounter the phenomenon of floating losses and floating profits, which is why Xiaocai emphasizes that you must have a certain risk tolerance before buying.
Finally, Xiaocai hopes that everyone can find satisfactory financial products in 2020.
statement: Kangbo Finance publishes this information for the purpose of disseminating more information. The content of the article is for reference and learning and exchange purposes only, and does not constitute any decision-making advice for you.
