Index is an important reference index of the investment market, which can not only help you evaluate the income of the market where the sample is located, but also directly invest as an investment object. In fact, there are many kinds of indicators. What is the difference between broad index funds and narrow index funds?

1, different conditions need to be met.

The broad base index must meet the following conditions: it contains 10 and above stocks, and the weight of a single constituent stock does not exceed 30%; The cumulative weight of the five stocks with the largest weight shall not exceed 60% of the index; The average daily trading volume of constituent stocks in the latest quarter exceeded $50 million, and if there are at least 15 stocks in the index, it will exceed $30 million.

An index that does not satisfy a wide-base index is a narrow-base index. Narrow base index refers to the index launched specifically for a certain industry and a certain field, such as industry-specific index for agriculture, emerging industries, oil and gas, etc. Or the theme indexes such as dividends, private enterprises and social poverty alleviation are smaller than the broad-based index.

2. Different characteristics and advantages

From the choice, the broad-based index requires higher scale and profitability, and its investment profit opportunities are also greater, which has the characteristics of dispersing risks and strengthening expected returns; On the one hand, broad-based index can avoid the situation of black swan in individual stocks; On the other hand, it can effectively reduce the risk of individual stocks.

The tracking index of the narrow base index is an industry index. Compared with the broad-based index, it is greatly affected and the corresponding investment risk is increased. Of course, the expected income level is more representative of the industry.