1. Index Fund, as the name suggests, is a fund that invests in index constituent stocks, that is, by purchasing part or all of the stocks included in an index to build an index fund investment portfolio. The purpose is to make the movement trend of this portfolio consistent with the index, so as to obtain roughly the same rate of return as the index. Index funds refer to fund operations based on the proportion of the constituent stocks in the selected index (such as the U.S. Standard & Poor's 500 Index, Japan's Nikkei 225 Index, Taiwan Weighted Stock Price Index, etc.) in the index, and the same selection is made. Invest in the asset allocation model to obtain profits that are in sync with the market.

There are more and more index funds in the market, and it is becoming more and more difficult to choose index funds. There are two points that investors need to pay most attention to when choosing index funds: On the one hand, choose those with better tracking growth. For index funds, finding such an index is no less difficult than choosing stocks; on the other hand, choosing to invest in index funds with smaller tracking errors indicates that the smaller the tracking error of the fund, the stronger the fund manager’s management ability and the better the investor’s ability. Achieve the goal of earning an index rate of return.

2. According to data from the Galaxy Securities Fund Research Center, as of the end of April 2012, there were 133 standard index funds and 24 enhanced index funds in the domestic fund market, which is unprecedented. Faced with numerous index funds, how should investors choose?

When choosing any fund, the strength of the fund company should be the primary factor that investors pay attention to, and index funds are no exception. Although index funds are passive investments and are relatively simple to operate, tracking the underlying index is also a complex process that requires precise calculations and rigorous operating procedures. Stronger fund companies are often able to track targets more closely.

Compared with actively managed funds, one of the advantages of index funds is low fees. However, the degree of "cheapness" of different index funds varies, so it is very necessary to minimize investment costs. Of course, it should be noted that lower fees are important, but only if the fund has good returns. Do not blindly choose index funds in pursuit of lower fees.

The core of an index fund lies in the index it tracks. Therefore, when selecting an index fund, it is particularly important to understand the market it corresponds to. In addition, investors can also achieve asset allocation purposes by investing in different index funds. There are currently many types of indexes in the domestic market, which can be said to be "a hundred flowers blooming and a hundred schools of thought contending." Different indexes cover different market ranges and have different risk-return characteristics. For example, the Shanghai Stock Exchange 180 and Shenzhen Stock Exchange 100 Index reflect the conditions of the Shanghai and Shenzhen Stock Exchanges respectively; CSI 100 and small and medium-sized board indexes respectively reflect the situation of blue-chip companies and small and medium-sized enterprises in the Shanghai and Shenzhen stock markets; even with the launch of cross-border ETFs, it is also good to choose both the Shanghai and Shenzhen 300 index funds and funds that invest in overseas market indexes. The direction of asset allocation can play a role in diversifying investments and diversifying risks to a certain extent.

The current overall return rate of index funds is not as good as that of stock funds. Because the stock market fluctuates around 3,000 points for a long time, index funds passively track the stock index. If the stock market cannot move up, it is difficult for index funds to perform well. Funds are long-term investments, and fixed investment is the best way to invest, whether it goes up or down. Fewer shares are bought when prices rise, and more shares are bought when prices fall. Fixed investment can effectively reduce investment costs in long-term investment. It is recommended to invest more than 200 yuan in fixed funds every month. Long-term fixed investment has less risk and higher yield. The key is that the compound interest rate is higher and the return on investment is higher. Huashang Shengshi Growth and Huaxia Advantage are both fund types with good trends, and you can choose fixed investment. Buy a fund in one go. It is recommended to buy China Return Fund, which has a stable trend. There are no big ups and downs, the returns are moderate, and the risks are relatively small. It is the fund that pays the most dividends among funds.