Index fund is a fund product that builds a portfolio by purchasing all or part of the constituent stocks of a specific index to track the performance of the underlying index. The following is the index fund compiled by Bian Xiao. Welcome to read!
What kind of fund is an index fund
Index fund is an investment fund that tracks the performance of a specific index. Its investment goal is to simulate a specific index as much as possible, and make the performance of the fund similar or close to the tracked index by purchasing related assets that constitute the index. The investment strategy of index funds is relatively simple and passive, and does not involve active stock selection or market timing.
Risk comparison between index funds and general funds.
Investment strategy: index funds make passive investments by tracking specific indexes. The main task of the fund manager is to copy the composition of the index as much as possible, and it does not involve active stock selection. For ordinary funds, fund managers actively choose investment targets based on personal judgment and research.
Fees: Index funds usually have lower management fees and transaction costs, because their investment strategies are relatively simple and passive, which reduces the research and transaction costs. The management cost of general funds may be higher, because it involves more active management and research work.
Return on investment: Because index funds mainly track the performance of a specific index, their return performance is usually similar or close to that of the tracked index. The return performance of ordinary funds depends on the investment ability and stock selection ability of fund managers.
Risk: the risk of index funds is relatively low, because their investment strategies are relatively passive and scattered, avoiding the individual risk brought by actively choosing investment targets. The risk of ordinary funds is related to the investment decision-making and stock selection ability of fund managers.
It should be noted that although the risk of index funds is relatively low, it does not mean that there is no risk. Market fluctuation, the risk of index constituent stocks and the operational risk of management companies still exist. When investors choose index funds, they still need to know the operation mode of funds, the characteristics of related indexes and the quality of management companies, and make choices and configurations according to their investment objectives and risk tolerance.
What does index fund mean?
As the name implies, index funds are fund products with specific indexes (such as Shanghai and Shenzhen 300 Index, Standard & Poor's 500 Index, Nasdaq 100 Index, Nikkei 225 Index, etc.). ) as the target index, and take the constituent stocks of the index as the investment object, build a portfolio by buying all or part of the constituent stocks of the index, and track the performance of the target index.
Generally speaking, the purpose of index fund is to reduce the tracking error, make the change trend of portfolio consistent with the underlying index, and thus obtain roughly the same rate of return as the underlying index.
Selection criteria of index funds
There are more and more index funds in the market, and it is more and more difficult to choose index funds. Investors should pay more attention to two points when choosing index funds: on the one hand, finding such an index is as difficult as choosing stocks; On the other hand, choose index funds with smaller investment tracking errors. The smaller the tracking error of funds, the stronger the management ability of fund managers, and the more investors can achieve the goal of obtaining index returns.
According to the data of Galaxy Securities Fund Research Center, by the end of April 20 12, there were 133 standard index funds and 24 enhanced index funds in the domestic fund market, which was unprecedented in scale. In the face of numerous index funds, how should investors choose?
1, pay attention to the strength of fund companies-fund comes first
When choosing any fund, the strength of the fund company should be the primary factor that investors pay attention to, and index funds are no exception. Although the index fund is a passive investment, the operation is relatively simple, but tracking the underlying index is also a complex process, which requires accurate calculation and rigorous operation process. Powerful fund companies can usually track the underlying index more closely.
2. Pay attention to fund fees-cost wins.
Compared with actively managed funds, one of the advantages of index funds is low cost, but different index funds have different degrees of "low cost", so it is very necessary to minimize the investment cost. Of course, it should be noted that lower fees are important, but the premise is that the fund has good returns. Don't blindly choose index funds for lower fees.
3. Pay attention to the target indicators-the most important.
The core of index fund lies in the index it tracks, so it is particularly important to know the corresponding market when choosing index fund. In addition, investors can also achieve the purpose of asset allocation by investing in different index funds.
At present, there are many kinds of indexes in the domestic market, which can be described as "a hundred flowers blossom and a hundred schools of thought contend". Different indexes cover different markets and have different risk-return characteristics, such as Shanghai Stock Exchange 180 and Shenzhen Stock Exchange 100 index, which reflect the situation of Shanghai and Shenzhen stock markets respectively. CSI 100 and SME index reflect the situation of blue-chip enterprises and SMEs in Shanghai and Shenzhen stock markets respectively. Even with the launch of cross-border ETFs, it is a good asset allocation direction to choose the Shanghai and Shenzhen 300 index funds and funds investing in overseas market indexes at the same time, which can play a role in diversifying investment and risks to a certain extent.
Advantages of index funds
1, human factors have little influence.
2. This ratio is very low. The subscription and redemption rate of general stock funds is 1- 1.5%, and that of index funds is 0.5- 1.2%.
3, passive tracking index personal finance calculator, very intuitive. It is also suitable for short-wave band operation.
4. Long-term investment has little risk and excellent return.