What is the difference between ETF funds and traditional index funds?

The difference between ETF and index fund;

1, different trading methods

Traditional index funds are generally purchased on third-party software, such as Tian Tian Fund Network and Egg Roll Network. ETF funds are generally purchased through the secondary market in the market, that is, they can be purchased directly through stock software, which is also the channel for our general retail transactions;

Secondly, investors can also purchase or redeem fund shares from fund management companies, but this method is generally adopted by institutions and local tyrants, because the threshold for purchase and redemption is very high, generally starting from 500,000 yuan.

2. The intraday valuation methods are different.

The intraday valuation of traditional index funds is the net value of funds estimated by some fund websites according to the proportion of fund positions held on that day and the fluctuation range of Shanghai and Shenzhen stock markets, while the prices of subscription and redemption are based on the net value of funds after night accounting and proofreading by fund companies and custodian banks.

The trading hours of ETF funds are different on trading days. The quotation is refreshed every 15 second, and the transaction is made at the real-time price, with the minimum unit of 1 lot. Note that at present, ETFs on domestic A-shares are still T+ 1 transactions.

3. The handling fee and management fee are different.

The fees and management fees of ETF funds are slightly lower than those of traditional index funds. ETF fund fees include: commission+management fee. Commission, like buying and selling stocks, is a few ten thousandths, and stamp duty is exempted. In terms of management fees, ETF funds are also lower than index funds.

4. Dividends are distributed in different ways.

The traditional dividend methods of index funds are cash dividend and dividend reinvestment. The only way to pay dividends for ETF funds is cash dividends.