1. What is an index fund?
An index fund is a fund product that takes a specific index as the underlying index, such as the Shanghai-Shenzhen 300 Index and the CSI 500 Index published by China CSI Index Compilation Company, takes the constituent stocks of the index as the investment object, builds a portfolio by purchasing all or part of the constituent stocks of the index, and tracks the performance of the underlying index.
2. The difference between index funds and regular funds.
(1) operation mode
In fact, the index fund adopts a passive operation mode, that is, the trading of individual stocks of the index fund is passively traded according to the changes of the index. Conventional funds adopt active trading mode, and their stock selection is independently selected and judged by the fund team.
(2) Performance benchmark
The performance of index funds actually depends on the increase and deviation of the reference index. If the reference index rises, the net value of the index fund will also rise. The performance of conventional funds is mainly determined by the comprehensive strength of fund managers and operation teams.
(3) Transaction costs
Because index funds use passive trading, their transaction costs are relatively low, subscription fees and management fees are relatively low, and the trading market of conventional funds is higher than that of index funds.
The above three points are the main differences between index funds and conventional funds, mainly reflected in their trading and operation methods. Both have their advantages and disadvantages. Tips: Financial management is risky, and investment needs to be cautious.