The simple understanding of enhanced index funds is to give fund managers more freedom to play besides investing in the stock portfolio corresponding to the index. For example, the shareholding ratio of some stocks can be freely increased or decreased. For example, the CSI 300 Enhanced Index Fund can invest 90% in the stock portfolio corresponding to the CSI 300 Index. As we all know, 90% of the funds are used to copy the Shanghai and Shenzhen 300 Index for passive management. The remaining 10% is the space left for fund managers to play freely. Active management can be carried out, then this free space is to play a strengthening effect.
The purpose of the enhanced index fund is to surpass the average income level of the index itself.
Therefore, the risk-return characteristics of enhanced index funds are higher than those of ordinary index funds, because the enhancement effect may be positive or negative.
Judging from the current domestic market performance, many enhanced index funds have indeed exceeded the average income of the index and played a very good enhancement effect. Whether it is CSI 300, CSI 500 or SSE 50, the long-term annualized rate of return of enhanced index funds is higher than the corresponding index itself.