- 2024-05-22
- News
Mastering Investment Guide for CSI 500 "E-Rise"
In the current era of economic transformation from old to new drivers, who is the new calling card of my great A-shares? The "CSI A" series of broad-based indices (A50, A500, and A100) must have their names mentioned.
Especially the CSI A500 index, which combines both "large and comprehensive" and "niche and exquisite" characteristics, is an undeniable presence. The CSI A500 ETF and its off-exchange products linked to this index are also rising, increasingly becoming a new force in the index fund market.
Data shows that the first batch of 10 CSI A500 ETFs have been actively traded since their listing on October 15th, with a total transaction volume of over 41.9 billion yuan in just five trading days by October 21st. Including the Harvest CSI A500 ETF feeder fund, 20 off-exchange funds linked to the CSI A500 are also scheduled to be launched on October 25th.
Why is it eye-catching and money-attracting?
Many investors may ask: What is the charm of the CSI A500? Why does it receive such high attention? Why does it attract so many fund companies to compete? In fact, the "immortal fight" behind the scenes also fully demonstrates the investability of this index.
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Compared to traditional broad-based indices, the CSI A series of indices adds concepts such as industry neutrality, free-float market value sampling, the introduction of ESG indicators, and mutual connectivity.
The new industry weighting method makes it possible to "select leading companies from each industry"; free-float market value sampling helps to avoid liquidity issues caused by an excess of non-free-float shares, offering better investment attributes; the introduction of ESG indicators eliminates companies with ESG ratings of C or below; the addition of mutual connectivity screening elements, through the Stock Connect mechanism, allows domestic and foreign capital to allocate core A-shares, enhancing the international level of the market.
Adding the letter "A" in front of the index also hopes that this series of indices can better reflect the A-shares, with better representativeness and tool characteristics.
When it comes to the advantages of the CSI A500 index, it is still too comprehensive!
500 constituent stocks correspond to 201 Shenwan third-level industries/91 CSI third-level industries: Due to the priority selection of securities with the largest free-float market value in the CSI third-level industry or with a total market value ranking in the top 1% within the sample space as index samples. Therefore, in addition to large market values, it also includes some relatively small-scale, emerging track sub-sector leaders.The dispersion of the industry has also led to a dispersion in weight, with the combined weights of the top 10 and top 20 samples being around 20% and 30%, respectively. The lower concentration reduces the exposure of the CSI A500 to individual stock idiosyncratic risks, enhancing the investability of the index.
Is it still possible to get on board now?
Clarify the direction: The market trend is not over yet
From a long-term perspective of more than three years, Tianfeng Securities points out that the market may have already bottomed out and is unlikely to return to a more pessimistic state than the previous bottom. Therefore, on a long-term strategic level, it is necessary to focus on allocating equity assets.
Harvest Fund also believes that against the backdrop of active domestic policies and historical relatively low valuations, coupled with the loose liquidity in the external environment, although there is still a certain lag from policy implementation to effective results in the short term, the trend towards a positive direction is clear. The equity market is accompanied by an increase in investors' risk appetite and a reversal of expectations. After the market experiences the first rapid rise, core assets with fundamental support and relatively low valuations are expected to have better sustainability.
As a representative of A-share core assets with high-quality fundamentals, and also with interconnectivity and ESG characteristics, the CSI A500 index is expected to continue to benefit from active policies, institutional market entry, and the return of core assets.
Configuration timing: The index valuation is still relatively low
Three steps to GET the correct way to boardNowadays, with dozens of CSI A500 peripheral products competing on the same stage, how should one choose a more cost-effective one? Simply put, based on the premise of matching one's own risk-return preferences, it is recommended to carefully select from the following three aspects:
Compare fees: Saving is earning!
As a product that efficiently tracks the index, the ETF fee is already very low. The Jia Shi CSI A500 ETF and its linked funds have even lower fee settings, both using a management fee of 0.15% per year + custody fee of 0.05% per year, which belongs to the lowest tier in the industry and is more investor-friendly.
Dividend mechanism: Meet the demand for cashing out and liquidity
If there is a need for liquidity, or investors who pay more attention to cashing out, it is recommended to choose CSI A500 peripheral products with a dividend system.
For example, the Jia Shi CSI A500 ETF Linked Fund (Class A 022453, Class C 022454) continues the quarterly dividend design of the A500 Index ETF (159351). Under the premise of meeting the fund's profit distribution conditions, at least one profit distribution is carried out every quarter: on the last trading day of January, April, July, and October each year, the fund's excess return rate relative to the performance comparison benchmark and the fund's distributable profit are evaluated. This design is expected to better meet investors' asset allocation and cash flow needs.
Fund company: "Big factory" is more trustworthy
Although index funds belong to passive investment, fund companies do not need to perform complex operations such as stock selection and timing like managing active funds, but reducing tracking errors and reducing trading operations still require the fund management company to have strong management capabilities.
As one of the earliest public fund companies to layout index business in the public offering field, Jia Shi not only has a full range of ETF product shelves for everyone to choose from, but also has a series of representative classic products in both broad-based fields and characteristic themes with years of accumulated index investment management and service experience.
Finally, I would like to share with you a few feelings and suggestions from Zhang Chaoliang, the fund manager of Jia Shi CSI A500 ETF, and let's encourage each other:"In the face of short-term market fluctuations, it is better to actively respond rather than blindly following the trend of buying high and selling low. On one hand, investors can adopt a portfolio allocation strategy to increase sources of income and diversify risks. On the other hand, in terms of specific operations, investors may consider investing in ETF products through a strategy of regular investment in installments or building positions when the market is low, combined with appropriate profit-taking. This approach may lead to a better long-term experience."
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