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What is the difference between index funds and index enhancement funds?
1, the degree of replication is different: the similarity between enhanced index funds and index funds is to track the index trend. The biggest difference is that index funds are passively copied, while enhanced index funds are actively managed;

2. Different positions: the names and proportions of heavyweights of index funds are basically copied from the corresponding indexes; The corresponding weight share of index funds may be the same as the index, and others will be adjusted accordingly: it mainly depends on what kind of investment portfolio the fund manager adopts.

3. The investment fields are different in proportion: generally, index funds use more than 95% of the money to buy stocks, index enhancement funds use about 80%~90% of the money to buy stocks, and the rest of the money is played by fund managers themselves: or playing new shares, or buying bonds, or using it for financial derivatives such as stock index futures.

4. Management fees and custody fees: investment funds need costs, and passive index funds completely copy index stocks and rarely change positions; Enhanced index funds, in order to improve returns, fund managers frequently change positions and stocks, and the transaction cost is relatively high. Passive index funds have fewer human interference factors, and management fees and custody fees will be less; Enhanced index funds, run by fund managers, have higher management fees and custody fees.

Tips:

1. The above information is for reference only, and no suggestions are made;

2. There are risks in entering the market, so investment needs to be cautious.

Reply time: 2020- 12-02. Please refer to the latest business changes announced by Ping An Bank in official website.

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