The ultimate goal of the purest index fund is to keep a close eye on the index and try to simulate it. However, the investment industry is changing with each passing day. On the basis of index funds, there are enhanced index funds. The enhanced index fund mentioned overseas is to enhance the fund's income through some skills in the process of fund replication, such as changing the proportion of positions before the index is replaced, using ETF to squeeze the potential income of cash, buying the simulated index of index futures with a small amount of funds, and holding bonds with a large amount of funds to obtain additional income. Although the result of strengthening may be only 0.5%- 1% a year, it has been very impressive for many years.

How to judge the "skills" of enhancing index funds? Not only depends on the extra income, there is no free lunch in the world, but the increase of income is accompanied by the increase of risk, which is manifested in the form of extra volatility in index funds. Only by taking both into account can a good fund be achieved, and the performance of enhanced index funds can be measured by information ratio. This index is easy to calculate. Divide the fund return rate above the index by the additional volatility of the fund outside the index. Generally speaking, a fund with an information ratio above 0.5, that is, every time the yield of 1% is increased, the volatility will not increase by more than 2%, which is quite good. In fact, the information ratio can be used not only to evaluate and promote index funds, but also to measure the real performance of active funds, especially those with reference indexes.