What are the major (broad-based) indices on the market?

Our principle for selecting index funds is to choose the index first and then the fund, so understanding the index first is the first step.

What we call a broad-based index refers to some indexes with a relatively broad selection, regardless of industry. It is the most important and representative index in the market.

It has wide coverage and a relatively high degree of risk diversification.

1. CSI 300 Index The CSI 300 Index selects the 300 largest and most liquid stocks from the Shanghai Stock Exchange and Shenzhen Stock Exchange.

They are mainly large companies.

The CSI 300 Index basically includes all large domestic listed companies. In terms of market capitalization, it accounts for more than 60% of the entire domestic stock market, mainly large-cap stocks.

The CSI 300 is also considered the most representative broad-based index in the domestic stock market.

2. SSE 50 Index The SSE 50 Index is composed of the 50 largest, most liquid, and most representative stocks selected from the Shanghai Stock Exchange. It reflects the overall status of a group of high-quality large-cap companies that are the most influential in the Shanghai Stock Exchange.

These stocks are basically large companies related to the national economy and people's livelihood. They are generally state-controlled or one of the leading companies in the industry.

However, the 50 large companies included in the SSE 50 are actually basically all in the CSI 300, and their performances often overlap.

3. CSI 500 Index The CSI 500 Index excludes all 300 companies from the Shanghai and Shenzhen 300 Index, and then excludes the top 300 companies in terms of average daily total market capitalization in the past year. This can avoid the selection of large companies to the greatest extent.

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Among the remaining companies, select the top 500 companies in terms of daily average total market capitalization. This is the CSI 500 Index.

The CSI 500 itself is mainly mid-sized listed companies. In terms of positioning, it has very little overlap with the CSI 300 and SSE 50. It is a representative of domestic mid-sized companies and a representative of high-growth stocks.

4. GEM Index We all know that there are Shanghai Stock Exchange and Shenzhen Stock Exchange in China. The stocks we usually talk about are actually the stocks listed and traded on these two stock exchanges. Most of them are listed and traded on the main board.

The threshold for listing and trading on the main board is very high. The company needs to reach a certain scale and make enough profits.

However, there are some small companies that are currently not very profitable and cannot meet the conditions for listing on the main board.

The state provides such companies with a market with lower thresholds: the GEM market.

The purpose is to provide a listing financing channel for small and medium-sized enterprises, entrepreneurial enterprises, and high-tech industrial companies, such as LeTV.

The GEM Index selects the 100 largest and most liquid stocks from the companies listed on the GEM.

The overall company size of the GEM index is relatively small, and it is an index dominated by small and medium-sized companies.

Moreover, the profits of most of these companies have not entered a stable period, so the overall profit figure of the GEM is relatively low; compared with the SSE 50 and CSI 300, the GEM index is more likely to rise and fall sharply, so you must be mentally prepared when investing.

5. CSI Dividend Index The CSI Dividend Index is a stock with the highest average cash dividend rate in the past two years selected from both the Shanghai Stock Exchange and the Shenzhen Stock Exchange. The number of constituent stocks is 100.

Among them, there are many stocks with high dividends.

The most obvious feature of this index is its high dividend yield.

This is where the “dividend” in its name comes from.

Listed companies will allocate part of their annual profits to shareholders in the form of cash dividends, and dividends are not affected by the rise or fall of the stock price.

In a bear market, companies that can still pay dividends generally develop well, so they are a very good choice in a bear market.

If the CSI Dividend Index invests in a basket of such stocks, its stock price will naturally be relatively stable, and its volatility will be relatively low among various indices.

6. Hang Seng Index The Hang Seng Index invests in the 50 largest companies among all companies listed in Hong Kong, China. This is very similar to the Shanghai Stock Exchange 50 Index.

China Mobile and Tencent, which we are familiar with, are all listed in Hong Kong, China, and are also constituent stocks of the Hang Seng Index.

Because Hong Kong is an international financial center, investors in the Hang Seng Index are mainly foreign investors.

It is precisely because of this characteristic that the Hong Kong stock market is particularly susceptible to the influence of overseas markets.

7. Shanghai Stock Exchange 50AH Preferred Index Because many companies are listed on both A-shares and Hong Kong stocks, the part listed on Hong Kong stocks is H-shares.

For example, Ping An of China has both A shares and H shares. They are actually one company behind them.

However, investors in H shares are mainly foreign investors, which results in the rise and fall of H shares and A shares not being synchronized.

Sometimes H shares rise more, and sometimes A shares rise more.

If the price difference between A shares and H shares is too large, then the relatively cheaper one will have greater profit potential.

This is the AH stock rotation strategy: buy the relatively cheap AH stock and sell the relatively expensive one.