How do novices distinguish between wide-finger funds and narrow-finger funds? In addition to playing an important role in the stock market, index is also the focus of many investors in the fund market. Index funds can be divided into broad-index funds and narrow-index funds. The following small series will introduce you to the difference between wide-finger funds and narrow-finger funds.

The difference between generalized index and strategic index

1 Different conditions need to be met.

The broad base index must meet the following conditions: it contains 10 and above stocks, and the weight of a single constituent stock does not exceed 30%; The cumulative weight of the five major stocks does not exceed 60% of the index; The average daily trading volume of constituent stocks in the latest quarter exceeded $50 million, and if there are at least 15 stocks in the index, it will exceed $30 million.

An index that does not satisfy the broad base index is a narrow base index. Narrow base index refers to the index launched specifically for a certain industry and a certain field, such as industry-specific index for agriculture, emerging industries, oil and gas, etc. Or the theme indexes such as dividends, private enterprises and social poverty alleviation are smaller than the broad-based index.

2 Different characteristics and advantages

From the choice, the broad-based index requires higher scale and profitability, and its investment profit opportunities are also greater, which has the characteristics of dispersing risks and strengthening returns; On the one hand, broad-based index can avoid the situation of black swan in individual stocks; On the other hand, it can effectively reduce the risk of individual stocks.

The tracking index of the narrow base index is an industry index, which is more affected than the wide base index, and the corresponding investment risk increases. Of course, the income level is more representative of the industry.