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 stocks with the largest weight shall 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 a wide-base index is a narrow-base index. Narrow cardinal index refers to the specific index of a certain industry and a certain field, such as agriculture, emerging industries, oil and gas and other industries. 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 expected 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. Compared with the broad-based index, it is greatly affected and the corresponding investment risk is increased. Of course, the expected income level is more representative of the industry.
The above is about the difference between wide-finger funds and narrow-finger funds, and I hope it will help everyone. Warm reminder, financial management is risky and investment needs to be cautious.