Is an OTC fund an LOF as long as it is listed on the market? What are the classifications of OTC funds?
What is an OTC fund?
OTC is the stock market, or the secondary market as we call it. Over-the-counter is understood to be outside the stock exchange market, which is the agency of banks and securities companies, and the direct sales method of fund companies, which is the familiar open-end fund sales channel.
OTC trading price is real-time, that is, you then purchase the price is how much is how much, and stock trading is the same reason.
Like OTC subscriptions, OTC purchases (buys) can also pay dividends, but there is one difference: OTC purchases can only pay dividends in cash and cannot be reinvested, while OTC purchases can be reinvested. Funds that can be redeemed can also be redeemed over-the-counter, with the redemption price being the net value of the day as announced by the company after the market close. Buying (stock method) is different from applying (fund method) and selling is different from redeeming.
What are the categories of over-the-counter funds?
1, ETF Funds
ETF funds, known as Exchange Traded Open Index Funds, are a special category of index funds that combine the operational features of closed-end funds and open-end funds. Investors can both subscribe or redeem fund shares from the fund management company and buy and sell ETF shares on the secondary market at market prices, just like closed-end funds.
For ordinary investors with a small amount of capital, buying ETFs is more likely to be done in the secondary market, i.e., the over-the-counter market.
2, LOF Funds
LOF funds are known as listed open-ended funds. So essentially this is a kind of open-end funds, but this kind of open-end funds have special features: different from the general open-end funds, LOF funds at the end of the issue, investors can both subscribe and redeem LOF fund shares in designated outlets (over-the-counter), but also in the exchange trading the LOF funds (over-the-counter).
General LOF fund name will be with LOF word.
3, closed-end funds
First of all, this is a closed-end fund, issued after the share is fixed, cannot be in the off-exchange subscription to redeem the fund shares, but can be traded on the market. In addition, some fixed funds will be transformed into LOF funds after maturity, so it becomes both on-course trading and off-course trading of open-end funds.
4, Graded funds
Generally, the graded funds that can be traded on the market are mainly the fixed income graded A and leveraged graded B, while the graded mother funds are generally redeemed over-the-counter through subscriptions.
