If you want to avoid choosing stocks in your investment, then index funds are a good choice. According to different standards, there are different types of index funds. According to the coverage of constituent stocks, the index can be divided into broad-based index and narrow-based index. So how to choose the broad base index and narrow base index?

How to choose broad base index and narrow base index?

There is no difference between broad base index and narrow base index. After grasping their characteristics, investors can choose according to the market. The broad-based index covers a wide range of industries, while the narrow-based index only invests in a single industry or a certain theme.

Because the coverage of broad-based index is larger and the risk is more dispersed, the risk of broad-based index is smaller than that of narrow-based index. If you are a novice index fund, start investing in the broad-based index first.

The broad-based investment index pays more attention to the whole macroeconomic level in terms of fundamentals, and will not over-consider the influence of a certain industry and individual stocks; Investment debt-based index should pay more attention to the development of a specific industry and understand the law of industry rotation.

The above is Bian Xiao's sharing, and I hope it will help everyone.