In recent years, many people choose index funds to invest in stocks. Index funds follow the market index as an investment strategy. Because of its simple investment and low risk, many people favor it. However, there have been some situations in the market recently, which have puzzled many people: when the index rose, they found that their index funds fell.

What are the reasons for the index rising and the fund falling?

1, the trend of index-enhanced funds and indexes is not exactly the same;

2. The fund is small in scale;

3. Index funds cannot be accurately tracked.

For these reasons, index funds and indexes will not be exactly the same. Generally, index funds are passively managed, and the pursuit is the consistency of funds and indexes, that is, the same rise and fall. What fund managers often do is to minimize the deviation between the two, so usually the opposite will not happen.

Introduction of index funds:

For investors, the initial intention of buying index funds is to obtain the average performance of the market. The above are passive funds and active funds. The fund manager has certain management authority, and can remove the stocks in the fund, or select high-quality stocks to add. There are good and bad funds of this kind. If the fund manager can accurately distinguish between high-quality stocks, it will increase the rate of return, but if the direction is wrong, it will increase the loss. Investors see that index funds underperform the index, which is the strategic failure of active fund managers. However, in the China market, active funds are still relatively good, and the final rate of return is also optimistic.

Introduction of Index Enhancement Fund:

Index-enhanced funds are based on indexes, allowing fund managers to participate in active management moderately. The active management of fund managers is mainly reflected in three aspects:

1, the weight value of stocks is adjusted, in other words, fund managers can increase their investment in stocks that they feel are of high quality, which can improve the weight of such stocks in the fund;

2. Stock adjustment. Some enhanced funds even allow fund managers to moderately adjust the constituent stocks of the index and exclude the stocks that fund managers think are bad;

3. The position can be adjusted appropriately. Generally, index funds use all their assets to buy and sell stocks as much as possible, but if they are strengthened, when the situation is not very good, it is possible to slightly reduce the stock position and reduce the harm of decline.

This article mainly writes about the knowledge points of why the index rises and why the fund falls. The content is for reference only.