The advantage is that it can reflect the relationship between capital input and total output of project investment from a dynamic perspective; Shortcomings cannot directly reflect the actual rate of return of investment projects.
Application of vitality index
Index fund is a kind of fund that constructs a portfolio for securities investment according to the principle of compiling securities price index. Index funds invest in stocks according to the distribution of relevant stock market indexes, so that their fund returns are close to those of market indexes.
In operation, compared with other open-end funds, it has the characteristics of avoiding unsystematic risks more effectively, low transaction cost, delaying tax payment, less monitoring investment and simple operation. In the long run, index investment performance is even better than other funds. For purely passively managed index funds, the capital turnover rate and transaction cost are relatively low.
Management fees are often very small. Such funds will not invest too much money in certain securities or industries. Generally, full investment will be maintained, and there is no market speculation. Of course, not all index funds strictly meet these characteristics. Different index funds will also adopt different investment strategies.