Analyze why index investment will become more and more effective

The so-called index investment is to copy the index to form a stock portfolio as an asset allocation method, and to minimize the tracking error between the portfolio return rate and the index return rate as a performance evaluation standard. Xiaobian here sorts out why index investment will become more and more effective for your reference. I hope everyone will gain something in the reading process!

1. The long-term performance of index funds is excellent

In fact, according to the past historical experience data, we will come to a conclusion that the long-term performance of index investment often exceeds that of actively managed investment.

everyone may not believe it when you say it. Why?

So we have a data here. According to the data of Shenzhen Stock Exchange, from 27 to the end of the third quarter of 217, the average income of actively managed funds in the whole market was 177.37%, but the investment income of the CSI 5 Index reached 282%. The basic difference between the two is quite obvious.

2. Diverse investment risks without relying on personal judgment and experience

Many people may ask, why does index investment exceed the income of actively managed investment?

In fact, it is not difficult to understand that actively managing investment depends more on the personal judgment and analysis of fund managers, and strives to obtain the income beyond the benchmark. However, as we all know, fund managers are human beings, and the research scope of people is often limited. In the China market, the rotation of industries is particularly obvious, so one or two industries may be particularly good this year, and these two industries may become the last industries next year.

It is impossible for a fund manager to make a big change in his research style and investment style within one year. In this case, you will find that the performance of actively managed funds may be very good this year, but it may not be so good next year. In the long run, the final accumulated income may not be as much as expected.

and what is the advantage of indexed investment? The advantage of indexed investment is that it does not need to rely on the personal judgment of fund managers, and it always takes the average level of the market.

in the long run, with the development of national economy and the prosperity of national strength, in fact, all indexes should be in a long-term upward trend. Although there may be fluctuations in the short term, as long as it is long enough, it is generally upward.

and there is a very important point that I remind everyone to pay attention to, that is, the fund manager may actually be replaced. If the fund manager of the active management fund changes, the style of this product may have changed greatly, or the fund you bought before may be two completely different products from the fund you hold now, because different fund managers are helping you manage it.

There is no such risk in index funds. No matter who is the fund manager, his goal is to track the target index, with the minimum tracking error as the only investment standard. Therefore, under such circumstances, no matter who is a fund manager, the performance of index funds is relatively stable with its standards and style, which is more suitable for long-term investment.

and we also know that all the indexes are a basket of stocks, with at least a few dozen stocks and at most hundreds of stocks. This just confirms a very important statement in investment, that is, don't put eggs in the same basket, so the risk of individual stocks stepping on thunder will become very, very small, so it is also a very good way to reduce our investment risk.

3. Insist on long-term investment and make fixed investment in batches

Earlier, I talked about why index fund investment is effective. Finally, I would like to tell you that as an individual investor, investment index confidence actually needs to pay attention to or adhere to two things most:

The first point is long-term investment. Why do you want to emphasize this point? Because we said earlier that with the development of national economy and the prosperity of national strength, in fact, from the long-term trend, the index is going up. Therefore, if you allocate index funds, you must be patient and wait for the long-term trend of the index to rise, and don't be intimidated by the short-term decline and fluctuation. This is a key point.

The second point is to suggest that you use the method of fixed investment in batches to make allocation. Fixed investment in batches refers to purchasing a fixed fund variety with a fixed amount at a fixed time interval, and here it is more recommended to purchase index funds.

what is the advantage of fixed investment? The advantage of fixed investment is that when the market goes up and your fund net value goes up, the share you buy with fixed amount will become less, while when the market goes down and the fund net value goes down, the share you buy with fixed amount will become more. In the long run, you will find that among your positions, the share with low price will become more and more, while the share with high price will become smaller and smaller.

and because the index will go up in the long run, the index economy will also go up in the long run. With the increase of the net value of index funds, these low-priced shares you have accumulated for a long time will often get better returns in the end, so finally remind everyone that index funds are a very good investment variety, but in the middle of investment, I suggest that you must stick to it for a long time, and we recommend that you allocate them by means of fixed investment.

knowledge sharing:

indexed investment rose in the United States in the 197s, especially in the 199s. The emergence of ETF products led to the vigorous development of indexed investment in the global market. DeborahFuhr, head of ETF department of Barclays International Investment Management Company (BGI), showed that by the end of April 29, there were 1,768 ETF products in the world, with assets of 76.9 billion US dollars, of which the assets of stock ETFs reached 571.2 billion US dollars. The number of global ETFs has been equivalent to 19 times of the total of 92 in 2, while the global ETF assets are close to 1 times of the $74.3 billion in 2.

as a passive investment method, the fundamental difference between indexed investment and active investment method is that it invests completely according to the combination of index sample stocks, and the fund manager does not choose stocks, but gives the right to choose stocks to the index compiling institution. But from another point of view, the right to finally choose stocks is actually not given to the index compiling institution, but is actually given to the market. The most popular and recognized index in the market usually selects stocks according to market value and liquidity. Under the transparent index sampling standard, the stock entering and leaving the index sample stock portfolio is actually the result of the comprehensive market forces, and the "invisible hand" is playing a role. In this sense, the core idea of choosing a broad-based index with high market value coverage for investment is to share the market return (beta) and bear the market risk in a passive way, which is similar to the Taoist idea in China's traditional philosophy, that is, "Tao is natural" and "doing nothing without doing anything".

articles related to index investment:

★ Introduction to fixed investment of index funds

★ Introduction to stock and stock operation strategy

★ Buying funds requires knowing how to choose funds

★ Learning stock market knowledge

★ Interpretation of foreign exchange basics

★ How to buy fixed investment funds in 221

★ Timing of short-term stock purchase

★221