1 thought on “What does ETF mean?”

  1. The so -called ETF, what does it have on the market, what is the arbitrage mechanism? What does ETF meant for you? Both the stock index futures and ETFs are index -based instrumental products, but there are great differences between the two. In summary, it is mainly reflected in the following aspects:
    Value, trading in the form of margin, has an important leverage effect. According to the current design rules, the leverage of the CSI 300 Index futures in the future is about 10 times, and the application efficiency of funds is high. ETF is currently in stock with a full cash transaction index with a leverage effect.
    2. The minimum transaction amount is different. The minimum margin of each stock index futures contract is more than 10,000 yuan. The minimum trading unit of ETF is one hand, and the corresponding minimum amount is about 100 yuan.
    3. Sale stock futures do not include the dividend of the index component stocks. During the period of holding ETF, the dividend of the target index stocks belongs to investors.
    4. The stock index futures usually have a certain duration. The expiration date needs to be tracked, and the new stock index futures and treaties need to be repaid, and the ETF products have no renewal.
    5. With the different expectations of the investor, the trend of the stock index futures may not be exactly the same as the index. There may be a certain range of discounts and premiums. The ETF net value trend and index of the full passive tracking index usually maintain higher consistency.
    ETF can be used as spot hedging
    In comparisons above, we can see that although it is also an index -based tool -based product, stock index futures are different from ETF's product characteristics, which is suitable for different types of investors' needs. At the same time, from the perspective of the development experience of mature foreign capital markets, due to the needs of risk management, there is important interaction and complementary relationships between the spot products and futures products of the index.
    The industry insiders predict that with the launch of domestic stock index futures, the transaction activity of related index spot products will also affect. Considering the design of the Shanghai -Shenzhen 300 Index Futures, although there is no cross -market ETF as a direct spot hedging tool, it is not difficult to find through research, the combination of the Shenzhen Stock Exchange 100 and the Shanghai Stock 50 Index and the Shanghai and Shenzhen 300 Index have reached 99.4 The two index -related ETF products currently have sufficient liquidity and relatively complete arbitrage mechanism. Their combination is also an important spot hedge tool for 300 Shanghai and Shenzhen 300 stock index futures.
    The transaction open index fund ETF misunderstanding one: just for the exclusive exclusive. Many investors mistakenly believe that the threshold for ETF investment is too high, and the minimum redeeming units have a small number of hundreds of thousands, as many as one million copies, and the physical redeeming methods of one basket of stocks are cumbersome and complicated. Essence In fact, ETF shares can be traded like stocks and exempt stamp duty. The starting point (100 copies) is the starting point. Investors with a small amount of funds are also fully capable of participating.
    Misunderstanding 2: Only profit can be profitable in the bull market. With the expansion of ETF application scope, many application strategies have nothing to do with the bull and bear stage in the market. For example, there is a band operation strategy that has a profit opportunity. The price difference is a pairing trading strategy with profit opportunities, such as ETFs incorporated into the margin margin margin.
    Misunderstanding 3: It is only used to speculate in speculation. ETF has both transactions and configuration functions. As an index fund, ETF can perfectly shoulder the mission of medium- and long -term indexed investment and portfolio asset allocation, and the transaction cost and tracking error is much lower than that of ordinary open index funds. With the launch of cross -border ETF, fixed income ETF, product ETF, and even leverage ETF, ETF can provide richer medium- and long -term asset allocation solutions.
    Misunderstandings 4: Only enthusiastic arbitrage transactions. The first and secondary market instantaneous arbitrage is only one of the many application strategies of ETF, and the profit space is already small. Except for band operations and asset allocation, many strategies such as T 0 transactions, industry rotation, style rotation, market neutrality, multi -/empty market, and many strategies have been applied to actual combat. Even in arbitrage transactions, multi -strategic events arbitrage, future arbitrage, cross -market arbitrage, etc. continue to expand the application boundary of ETF.
    Misunderstanding 5: Only think the risk is extremely high. The stock ETF is almost full of operation, and the net value fluctuates greatly. However, ETF can be regarded as a "super stock" composed of many ingredients. Compared with a single stock, it can fully disperse risks. For investors with small amounts of funds or weak stocks, ETFs are just non -systemic risks of scattered stocks. Excellent tools.
    Misunderstandings 6: Just focus on high profile strategies. Some investors believe that the more complicated the ETF transaction application strategy, the more cutting the trading system, and the higher the transaction frequency, the higher the probability of profit, the higher the income. However, practice has proved that the complexity of the ETF transaction strategy and the frequency of transaction are not necessarily proportional. In actual combat, ordinary investors also have many opportunities to analyze simple technical indicators, and even use simple fixed investment strategies to obtain satisfactory returns.
    Misunderstandings Seven: The change of share is often wrong. Some investors are easy to see the wrong share of ETF after the ETF is subscribed for ETF. In fact, the share of ETF was different from the share announced after operation.
    After each ETF is established and established, before the official listing, "share conversion" must be carried out to enable the net value of ETF to establish a more intuitive connection with the index it tracks, which is convenient for investors to be investigated after listing. invest. As an example, the above certificate of small and medium disk ETF is an example. According to the closing value of the Small Small Small Disk Index on March 11, 2011, the ETF has reduced the fund share of the fund at 0.27331199. The net worth per unit was increased to 3.684 yuan, and the fund share was reduced by the above proportion.
    of course, there are also changes in the opposite direction. For example, some ETFs originally converted the share according to the one thousandth of the index; after a period of time, the split was divided, and the share was converted according to the one thousandth of the index. Just turn a few cents.
    This, when looking at the ETF share, investors need to see whether they have converted or split shares; changes in share will cause changes in the net value of the unit, and the change of the relationship between the net value of the ETF unit and its tracking index.
    Th transaction -type open index fund ETF arbitrage mechanism Due to ETF trading in the secondary market, affected by the supply and demand relationship, it will cause deviation between the ETF market transaction price and its net worth. In addition, ETF charges management fees, paid transaction costs, and dividend dividends, which will also cause a certain deviation between the two. When this deviation is large, investors can use the purchase and redemption mechanism for arbitrage transactions.
    For example, when the market transaction price of 50ETF is higher than the net value of the fund share, investors can buy portfolio securities, use this portfolio securities to purchase ETF fund share, and then sell the fund share in the secondary market, so as to earn earns to earn earns to earn earns to earn earns to earn earns to earn earns to earn earns to earn earns to earn to earn earns to earn earns to earn earns. The difference after deduction is removed. On the contrary, when the ETF market price is lower than the net worth, investors can buy ETFs, then redeem through the first -level market, exchange for a basket of stocks, and then throw the stock in the A -share market to earn the difference.
    The arbitrage mechanism provides investors with a new profit opportunity, but its biggest role is actually that through the purchase and redemption transaction of the arbitrage, the deviation between the ETF transaction price and its net value Always be consistent with the index.
    It must be emphasized that because arbitrage transactions require operating skills and powerful technical tools, and a arbitrage transaction of one or two institutions eliminates the opportunity to arbitrage. Therefore, for retail investors, arbitrage transactions are not appropriate. The starting point of the purchase and redemption of the Shanghai Stock Exchange 50ETF is 1 million, and it also determines that small and medium retail investors cannot participate in arbitrage.
    The causes from arbitrage opportunities can divide ETF arbitrage into multiple categories: arbitrage between primary and secondary markets, arbitrage in futures and spot markets, and differently staring at the arbitrage between indexes.
    The arbitrage between the first and secondary markets
    The traditional ETF trading mechanism has two layers: first, during the transaction time, investors can purchase and redeem the ETF share at any time in the first level market; In the secondary market, ETFs are listed on the exchange, and investors can buy and sell ETF shares at the market price.
    Is when the secondary market price of ETF is higher than its fund share reference net value (IOPV), investors can purchase ETF share at a relatively low price, and to sell arbitrage in the secondary market at a higher price at a higher price at a higher price at a higher price at a higher price in the secondary market. Income; when the ETF secondary market price is lower than that of IOPV, investors can operate reverse. This arbitrage model requires investors to have a certain capital basis, and too little funds cannot be operated.
    The arbitrage between futures spot market
    The arbitrage between futures and spot markets is to make profits with deviations between the use of index futures and ETF (representing a basket of stocks). Such as the arbitrage of the Shanghai -Shenzhen 300 Index Futures as the target of the transaction. In the market, some investors will use the futures spot market and the CSI 300 Index to be highly synchronized and occasionally deviated ETF to arbitrage.
    It -in -line arbitrage in the index
    If investors judge that although the overall direction of the market is upward, the ETF prospects that are staring at the A industry are better than the B industry, and investors can sell them by selling them. Living in the B industry ETF and buying ETFs in the A industry at the same time, thereby obtaining the difference between the two ETFs.
    The other is the arbitrage between ETF and the index.
    The fund companies use the representative replication method to form ETFs to reduce transaction costs through preferred part of the component stock replication index. The ETF that chooses to use the representative replication method does not fully copy the component securities in the index, so there are different directions and changes between the direction and the amplitude between the index between ETF and the index that are staring at.

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