What is an enhanced index fund?
Index-enhanced funds are similar to stock index funds in terms of investment constraints, but are comparable to stock active funds in terms of expected return on investment. Therefore, from the perspective of fund investment management, index-enhanced funds can be regarded as both stock index funds and stock active funds.
Advantages of enhanced index funds
1. Select stock investment to strengthen. On the basis of allocating some assets according to the target index structure, invest the remaining assets of the fund in stocks, industries and sectors with appreciation potential, increase positions in an appropriate proportion, and improve expected returns.
2. The enhancement method is to invest in financial derivatives, such as buying bullish stock index futures, which will increase the expected income opportunities.
3. After choosing the enhanced index fund with good operability and high effect, for lazy or novice investors, the independent space of the fund is large and the professional requirements for investors are not high.
Disadvantages of enhanced index funds
1. Compared with the traditional index fund, it will rely more on the fund manager, reducing the index fitting degree and the ability to estimate the expected return.
2. For investors who have long-term investment in band operation, it is better to choose ordinary index funds, because the on-site trading operation is convenient, the handling fee is cheap, and the operation judgment of key points is better.
3. As the expected income increases, so does the risk.
Having said so much about the advantages and disadvantages of enhanced index funds, I hope it will help you. Warm reminder, financial management is risky and investment needs to be cautious.