What is an index enhancement fund?
Index enhancement fund is a kind of index fund, which is a little different from ordinary index funds: most index funds completely track the index performance, and fund managers do not need to choose stocks or timing (they directly invest according to the constituent stocks of the index, and when the index adjusts the constituent stocks, the index funds will also adjust accordingly). Index enhancement funds allow fund managers to invest in stocks other than index constituent stocks in pursuit of excess expected returns, but the investment ratio shall not exceed 20% of non-cash assets.
Index-enhanced funds, in short, are mainly based on indexed investment, supplemented by active management by fund managers. Its expected return is divided into two parts, one is the expected return of copying the index part, and the other is the excess expected return obtained on the basis of stock selection. Each index-enhanced fund outperforms the index through different ways of timing or stock selection, and achieves excess expected returns.
Is the index enhancement fund "enhanced"?
Take the Shanghai and Shenzhen 300 Index Enhancement Fund as an example. In 20 18, the average expected return of the Shanghai and Shenzhen 300 index enhancement funds is in, and the average expected return of the Shanghai and Shenzhen 300 index enhancement funds is in. In the long run, the index enhancement fund has indeed achieved better expected returns than the index. So if you want to make a fixed investment in index funds, index-enhanced funds may be a better choice.