Narrow base refers to index funds introduced into a certain industry or sector, such as consumer ETFs, brokerage ETFs, pharmaceutical ETFs, food ETFs, etc.
Index funds track a specific index and buy all or part of the constituent stocks in the index in order to obtain the same income as the index.
1 broad base index
Generally speaking, a broad-based index refers to an index fund with a wide coverage of constituent stocks, which generally includes many industries, such as the well-known Shanghai Composite Index, the Shanghai and Shenzhen 300 Index, the China Securities 500 Index and the Growth Enterprise Market Index. Based on this feature, the number of constituent stocks of broad-based index is often large, the weight of a single stock is low, and the investment target is wider.
Shanghai Composite Index: It includes all stocks listed on the Shanghai Stock Exchange, including A shares and B shares, reflecting the price changes of stocks listed on the Shanghai Stock Exchange. It was officially released from July 199 1 to July 15. The Shanghai Composite Index is usually called a barometer of the A-share market, but because of the large number of stocks it covers, it has not participated as the underlying index in fund products.
Shanghai and Shenzhen 300 Index: It is the weighted average of the 300 largest and most liquid stocks selected from Shanghai and Shenzhen stock markets, and it is re-selected twice a year, so the Shanghai and Shenzhen 300 Index mostly reflects the market level of large-cap blue-chip stocks.
CSI 500 Index: Excluding the sample stocks of CSI 300 Index and the top 300 stocks with average daily market value in the latest year, the remaining stocks are sorted from high to low according to the average daily turnover in the latest year (since the listing of new shares), excluding the bottom 20% stocks, and then sorting the remaining stocks from high to low according to the average daily market value, and selecting the top 500 stocks as the sample stocks of CSI 500 Index to comprehensively reflect the small-cap companies in Shanghai and Shenzhen stock markets.
Growth enterprise market index: select some constituent stocks for calculation, and select 100 sample stocks as the index target. The sample selection index is the ratio of the average circulating market value to the average transaction amount within six months, which reflects those entrepreneurial enterprises, small and medium-sized enterprises and high-tech industrial enterprises with short establishment time and small capital scale.
2 Narrow radix index
Compared with the more comprehensive and diversified broad-based index, the so-called narrow-based index is the relevant index focusing on specific strategies, styles, industries and themes of investment. The index style is very distinctive, so people can know at a glance what kind of industry or theme the constituent stocks are. Because only relevant industries or themes are selected, other stocks are excluded, so its optional range is relatively small, so it is also called narrow base index.
Common narrow-base indexes such as CSI industry index, CSI style index, CSI theme index and CSI strategy index. Specific examples are: CSI Energy, CSI Consumption, 300 Growth, 300 Value, CSI Dividend, Fundamental 50, etc.