Index fund is a kind of fund with the principle of fitting the target index and tracking the change of the target index to realize the synchronous growth with the market. The investment of index funds adopts the investment strategy of fitting the target index return rate, and invests in the constituent stocks of the target index in a diversified way, so that the stock portfolio return rate fits the average return rate of the capital market represented by the target index.
According to the different replication methods, index funds can be divided into:
1, full replication type, this kind of index fund generally replicates the index at 100% and adopts a completely passive strategy.
2, enhanced, this kind of index fund through its enhanced design, create the advantage of striving to surpass the target index. Such index foundations allocate most assets according to the weight of the benchmark index, increase or decrease the constituent stocks to a certain extent, or increase the holdings of stocks other than constituent stocks. Its investment goal is to closely track the benchmark index and obtain higher returns than the benchmark.
3. Optimize the index type, that is, through the organic combination of indexed investment and active investment, strive to surpass the index growth rate of the securities market and seek long-term appreciation of fund assets.