To invest in the A-share market, you must master some know-how.
For example, finding a competent index will usually make investing much easier and more reliable. So, what kind of index is considered "capable"? It should be a large market capitalization, a wide and balanced industry distribution, the ability to quickly grasp new opportunities, and a long-term upward trend. In particular, well-designed and ingenious broad-based indices (indices that cover both large- and mid-cap stocks) are more often a concentrated inflow of long-term funds.
If we take into account the above differences, we can find that the upcoming A500 ETF is more in line with international standards. First of all, it has better representation. The A500 Index covers 56% of all A-shares by float by market capitalization, 64% of company revenue, and 30 of all 31 industries (compared to 28 in the CSI 300 Index and 26 in the A50 Index). (Source: WIND, as of August 27, 2024) Secondly, the market capitalization of constituent stocks is more diversified. Among the constituent stocks of the A500 index, there are 165 with a market value of more than 50 billion yuan, 307 with a market value of 100~50 billion yuan, and 28 with a market value of less than 10 billion. (Source: WIND, as of August 27, 2024) Third, in terms of compilation rules, according to the official information of CSI Index, the A500 index includes ESG indicators, excluding companies with ESG ratings of C and below, in other words, it directly includes important indicators such as governance structure, social contribution and financial performance. According to the 2020 research report of the ESG global index team of overseas index companies, within the same sample range, the index compiled using ESG ideas and the index of the traditional compilation method may have a certain excess return under similar risk performance.
In addition, under the existing compilation strategy, the specimen companies in the A500 index also cover more globally competitive industries and may have stronger competitiveness in the international market. According to WIND's statistics on the 2023 annual reports of listed companies, the average overseas business of the constituent stocks of the CSI A500 Index accounted for 18.34%, significantly exceeding the traditional broad-based index of A-shares (chart below, data source: WIND, as of August 27, 2024).
At the same time, we can also find that the revenue growth rate of the A500 index constituents in the past three full fiscal years has been significantly higher than that of the constituents of the CSI 300 Index and the CSI 800 Index (chart below, data source: WIND, as of August 27, 2024). This clearly reflects the stronger business competitiveness and performance resilience of the A500 index constituents.
Who will win the favor of investors? So among the first batch of 10 A500 ETF products, what kind of funds are more likely to become the varieties that international and mainland patient capital and ordinary investors are willing to participate in in the future? Industry opinions believe that the management company has strong financial resources and the executive team has rich management experience, and is more likely to create ETF products with high investability and favor by funds from all walks of life. Taking Yinhua Fund as an example, which launched A500 ETF (159339), the company was established in May 2001 and is one of the earliest fund management companies in the industry. The company has full asset management license qualifications such as enterprise annuity, social security fund, QDII, insurance fund, pension and special account, and as of the end of June 2024, the total asset management scale exceeds 920 billion. Of course, the management of any ETF variety is a long-term and arduous work, and it will take time to give an exact answer to the development and growth of this variety in the future.
Risk Warning:
Investment is risky and should be cautious. A fund is a long-term investment vehicle whose main function is to diversify investments and reduce the individual risks associated with investing in a single security. Unlike financial instruments such as bank savings that can provide fixed income expectations, when you buy fund products, you may not only share the income generated by the fund's investment according to your holdings, but also bear the losses caused by the fund's investment.
Before you make an investment decision, please carefully read the fund contract, fund prospectus and fund product key facts statement and other product legal documents and this risk disclosure, fully understand the risk-return characteristics and product characteristics of the fund, carefully consider the various risk factors existing in the fund, and fully consider your own risk tolerance according to your own investment objectives, investment period, investment experience, asset status and other factors, and make rational judgment and prudent investment decisions on the basis of understanding the product situation and sales suitability opinions.
In accordance with relevant laws and regulations, Yinhua Fund Management Co., Ltd. makes the following risk disclosures:
1. According to the different investment objects, funds are divided into different types such as stock funds, mixed funds, bond funds, money market funds, funds of funds, commodity funds, etc., and you will get different income expectations and bear different degrees of risk when you invest in different types of funds. Generally speaking, the higher the expected return of a fund, the greater the risk you take.
2. The fund may face various risks in the process of investment and operation, including market risks, as well as the fund's own management risks, technical risks and compliance risks. Huge redemption risk is a risk unique to open-end funds, that is, when the net redemption application of a single open-day fund exceeds a certain percentage of the total fund shares (10% for open-end funds, 20% for regular open-ended funds, except for special products specified by the China Securities Regulatory Commission), you may not be able to redeem all the fund shares applied for in a timely manner, or the payment of your redemption may be delayed.
3. You should fully understand the difference between regular fixed investment and lump sum deposit and withdrawal of funds. Regular investment is a simple and easy investment method to guide investors to make long-term investment and average investment costs, but it cannot avoid the inherent risks of fund investment, cannot guarantee investors to obtain returns, and is not an equivalent financial management method to replace savings.
4. Risk disclosure of special types of products: Investors should pay attention to the risk of fluctuation of the underlying index and the unique risks of ETF (exchange-traded fund) investment.
5. The fund manager undertakes to manage and use the fund assets in good faith, diligence and responsibility, but does not guarantee that the fund will be profitable, nor does it guarantee the minimum return. Past performance of the Fund and its net worth are not indicative of its future performance, and the performance of other funds managed by the Fund Manager does not constitute a guarantee of the performance of the Fund. Yinhua Fund Management Co., Ltd. reminds you of the principle of "buyer's responsibility" in fund investment, and you shall bear the investment risks caused by changes in the operation status of the fund and the net value of the fund after making an investment decision. Fund managers, fund custodians, fund distribution agencies and related institutions do not make any promises or guarantees for the investment returns of the fund.
6. The Fund is applied for and raised by Yinhua Fund Management Co., Ltd. in accordance with relevant laws, regulations and agreements, and is licensed and registered by the China Securities Regulatory Commission (hereinafter referred to as the "China Securities Regulatory Commission"). The Fund's fund contract, prospectus and KFS have been publicly disclosed through the CSRC's fund electronic disclosure http://eid.csrc.gov.cn/fund and the fund manager's website www.yhfund.com.cn. The registration of the Fund by the CSRC does not indicate that it has made a substantive judgment or guarantee on the investment value, market prospects and returns of the Fund, nor does it indicate that there is no risk in investing in the Fund.
Investors should read the "Fund Contract", "Prospectus" and other legal documents of the fund to understand the risk-return characteristics of the fund, and judge whether the fund is suitable for the investor's risk tolerance according to their own investment objectives, investment period, investment experience, asset status, etc. This article does not constitute personal investment advice and does not represent the views of the published platform, and users should consider whether any opinions, views or conclusions in the article are in line with their specific circumstances. Funds are risky, investment should be cautious, please make independent judgment and decision-making.