1. Investors who have in-depth understanding and confidence in a certain industry or theme. This kind of investors can choose the corresponding narrow index fund according to their own investment experience and judgment on the development prospect of the industry theme, so as to realize accurate investment in the industry.
2. Investors who want to get excess returns. This kind of investors can take advantage of the high volatility of narrow-base index funds to trade in short-term bands and get higher than the market average.
3. Investors who want to diversify their investments. Such investors can buy some narrow-based index funds while holding some broad-based index funds, so as to improve the overall portfolio's rate of return and anti-risk ability.
Of course, not all narrow index funds are worth investing in. Investors should pay attention to the following aspects when purchasing narrow-base index funds:
1. The advantage of narrow-base index fund is that it can seize the development opportunity of a certain industry or theme, enjoy its excess income, and avoid the risks of other industries or themes. The disadvantage of narrow-based index funds is that they are highly volatile, and are greatly influenced by factors such as industry or theme cycle, policies and competition, which requires investors to have high risk tolerance.
2. Compared with broad-based index funds, narrow-based index funds are more specialized and refined, and can better seize opportunities in industries and sectors. Although the investment scope of narrow-based index funds is limited, there may still be tracking errors with the index, which may lead to inconsistent performance with the underlying index. When choosing a narrow-base index fund, investors need to focus on the investment direction of the fund and choose industries or themes with great development prospects and good stability, so as to reduce investment risks and obtain more stable returns.