Strictly speaking, index funds and hybrid funds cannot be compared. If we have to compare, the biggest difference between index funds and hybrid funds is that the former belongs to passive funds and the latter belongs to active funds.
Index funds, also known as passive funds, should be active funds, and the difference between them lies in the different investment concepts.
Passive funds do not actively seek performance beyond the market, but try to replicate the performance of the index. They usually choose a specific index as the tracking object, so they are usually called index funds, which are roughly divided into two categories: stock funds and bond funds.
Active fund is a kind of fund that tries to achieve performance beyond the benchmark portfolio, which is subdivided into stock type, hybrid type and bond type.
See the figure below for the specific classification:
When we discuss index funds, we usually talk about index stock funds, because index stock funds start early, with a large number, high market acceptance and many investors. According to the statistics of Galaxy Securities, as of August 3, 20 18, there were 67/kloc-0 index stock funds and only 6/kloc-0 index bond funds in the city.
Therefore, the main problem may be transformed into the difference between index stock funds and hybrid funds, which has to be discussed from many aspects such as stock positions, operational requirements and rates.
The first is location. To put it bluntly, it is the proportion of assets used by the fund to allocate stocks. The level of stock positions is usually proportional to the risk. The position of index stock funds is generally above 80%, which belongs to the investment variety with high risk level in fund products. The position of hybrid funds is very flexible, ranging from 0 to 95%, depending on the contract. Because of its flexibility, fund companies now prefer to issue hybrid funds. In terms of stocks, the proportion of hybrid funds in all funds is also the highest, reaching 42% (Galaxy Securities, as of August 3).
Off-topic, in the product risk sequence, the risk of hybrid funds should be lower than that of equity funds, but in practice, many hybrid funds are comparable to equity funds (positions exceed 80%). When choosing specific products, investors should carefully look at their past positions and the investment style of fund managers to clarify their risk levels.
Second, the assessment criteria are different. Index fund aims to reduce the tracking error, make the change trend of portfolio consistent with the underlying index, and thus obtain roughly the same rate of return as the underlying index. The key to evaluating index funds is to look at the degree of fitting with the tracking index, mainly the "tracking error index", that is, the standard deviation of the difference between the daily return of the fund's net value and the daily return of the benchmark index, as long as the error is within the prescribed range. From this perspective, it is not necessarily a good thing that pure index funds (excluding enhanced index funds) exceed the benchmark index too much.
Hybrid funds are not. As actively managed products, the investment goal of such products is to obtain excess returns, which needs fund managers to achieve through asset allocation, stock selection/securities, timing and position control. Therefore, hybrid funds need fund managers to give full play to their subjective initiative, which requires higher investment and research ability.
Third, the rates are different. Because active management funds have higher requirements for managers' investment and research ability and consume more manpower, material resources and financial resources, the management fee level is generally higher than that of passive products. Wind data shows that the average management fee of hybrid funds is 1.46%, mostly 1.5%. Stock index funds average 0.65%, most of which are 0.5%.
Roughly speaking, the biggest difference between index funds and other active products is that the former is transparent in combination, low in rate and less influenced by people. In recent years, it has attracted more and more attention from investors and institutions. Many fund companies, including Tian Hong Fund, take index products as their strategic development direction.
In addition, under different market conditions, their performance is also different. In the bull market, stock index funds are flexible and rise rapidly. In 2009 and 20 14, A shares were in the bull market stage, and many of the top performance in that year were index products. Shock cities and bear markets have higher requirements for asset allocation, stock selection/securities, timing and positions, and hybrid funds may be more secure. However, we cannot generalize. Considering the transparency and rate advantages of index funds, if the main body wants to make a long-term fixed investment, it may wish to consider index funds.
Risk warning: The above views are for reference only and do not constitute investment advice. The market is risky and investment needs to be cautious.