Index fund refers to a fund that buys all or part of the securities contained in an index according to the standard of the index, and its purpose is to achieve the same expected annualized expected return level as the index and achieve synchronous growth with the market. Theoretically speaking, the operation method of index fund is very simple, as long as you buy the corresponding proportion of securities according to the proportion of each securities in the index and hold it for a long time.

Index funds adopt passive investment, choose an index as the imitation object, and buy all or part of the securities in the securities market according to the standard of the index in order to obtain the same expected annualized expected return level as the index.

Asset value of index funds

First of all, from the perspective of positioning, index funds are tool products and asset allocation tools. Its first advantage is low cost, and its second advantage is strong performance predictability. Because index funds, especially purely passive index funds, are basically only related to the overall performance of the market and have a weak correlation with the active quality of managers, they are more suitable for institutional investors as allocation tools at this stage, such as insurance companies. Index funds are also a necessary variety when switching large-scale assets of institutions.

Secondly, even in a weak market, the index fund is still the best investment target to capture the expected annualized expected return of the band. The long bear market has lasted for three years since 20 10, but during this period, the index has rebounded a lot. As we all know, all varieties that have performed well in the weak market are slow to turn around because of their defensive characteristics and position restrictions. At this time, the index fund is the best tool to capture the rebound.