Broad-based index fund refers to a multi-industry, wide coverage and quite representative index fund. These funds can be large-cap funds or small and medium-sized index funds. Generally, broad-based index funds are more suitable for fixed investment. For example, Shanghai Composite Index, Shanghai and Shenzhen 300 Index, China Securities 500 Index, Growth Enterprise Market Index, etc. The number of constituent stocks in the broad-based index is often large, and the weight of a single stock is low, and the investment target is wider.

What is a narrow index fund?

Corresponding to the broad base index is the narrow base index, that is, the industry index. The fund corresponding to each industry index must also contain more than ten constituent stocks. However, these constituent stocks must correspond to constituent stocks of the same industry. For example, the liquor industry index is an index composed of stocks dealing in liquor selected from the Shanghai and Shenzhen 300 Index and the CSI 500 Index. Its constituent stocks are mostly 10 liquor industry stocks, which shows that the liquor industry index not only limits the number of constituent stocks, but also limits the industry. Non-liquor stocks cannot be included in the liquor industry index.