Comparison with Other Financial Products
Comparison with Other Financial Products
Category ETF Stock Index Fund Active Fund Index Futures
Investment Purpose Specific index Excessive profit on index Specific index Excessive profit on index Hedge and gain
Legality Collective investment securities Security with stake Collective investment securities Collective investment securities Derivative product
Transparency High High Average Average High
Liquidity High High Low Low High
Settlement day T+2 T+2 T+3 T+3 T+1
SLB Yes Yes No No No
Leverage function
(purchase on margin)
Yes Yes No No Yes
Transaction cost Broker Transaction Fee
&
Commission
(approximately 0.5%)
Broker
Transaction
Fee
commission
(1~2%)
commission
(2~3%)
Broker
Transaction
Fee
Transaction with All Securities Firms Yes Yes Limited to selling company Limited to selling company Yes
Systematic Risk Systematic Risk Systematic/
Unsystematic
Risk
Systematic Risk Systematic/
Unsystematic
Risk
Systematic Risk
Diversification Yes No Yes Yes Yes
Securities Transaction Tax Exempt Sales n/a n/a Exempt

The above figure shows that ETFs have characteristics of funds and stock/futures. In other words, their unique features, such as management goals, legality, diversified investment, tax and remuneration, coincide with those of funds, and their characteristics such as cashability, liquidity, or trading convenience are similar to those of stock/futures. ETFs are innovative products that provide a wide choice of investment with advantages of both funds and stock/futures.