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How do small and medium investors choose ETF funds

2018-05-14 12:48:49

The stock exchange said that in general, ETF investors are mainly divided into the following types: the first type is investors who do not have time to conduct market research, and hope to simply obtain the long-term average return of the market by holding ETF for a long time; The second category is investors who have confidence in their own ability to choose the time, and hope to trade the short and medium term trend of the index through ETF to obtain the index fluctuation income; The third category is investors who have certain research on the industry and sector of the market, and hope to use ETF to convert investment hotspots and obtain returns exceeding the average level of the market. The fourth category is investors with higher risk tolerance and more time to pay attention to the market, hoping to carry out leveraged index trend trading and short selling through ETF margin financing. Therefore, investing in ETFs must first clarify their investment objectives, deadlines and risk tolerance. At the same time, as long as the ETF is a passive fund, the performance of the fund is not as closely related to the research ability of the fund as the active fund, but the fund's management ability is still closely related to the tracking error between the fund's net worth and the underlying index, the fund's operating cost, scale and liquidity. When choosing ETFs, investors need to consider the overall strength of different index management teams, the degree of emphasis on index investment, the operational performance and risk control level of index products in history. In addition, investors need to focus on the index behind the ETF, which mainly includes three aspects: pay attention to the basic types of indexes and locate the differences between the types of assets tracked by the ETF, such as bonds, gold, currencies, etc., and the differences between investment markets, such as single market, cross-market, cross-border, etc. At the same time, according to the coverage and preparation of the index, it can also be divided into scale index, theme index, industry index, style index and so on. Size index reflects the overall performance of different size characteristics of the securities market, such as large-cap, mid-cap and small-cap indexes. Etfs tracking size index include SSE 180 Index ETF, SSE medium and small-cap Index ETF, etc. Investors who adopt long-term investment strategy of index (including fixed investment) can choose market size index with strong representation and wide coverage. Etfs that track thematic indexes include SSE Commodity Index ETF, SSE Dividend Index ETF, SSE Industry Index ETF, etc. The industry index is an index that reflects the listing performance of different industries, and the ETF that tracks the industry index, such as the Shanghai 180 Financial Index ETF. Style indexes reflect the overall performance with certain common market characteristics, and different styles show different risk-return characteristics. Etfs that track style indexes include SSE 180 Value/Growth Index ETFs. Investors who are ready to make thematic, sector, style and sector rotation investments can choose from the ETFs corresponding to the above index types. At present, the ETF pedigree of SSE includes some complementary pair portfolio varieties, such as SSE cyclical ETF and SSE non-cyclical ETF, SSE 180 growth ETF and SSE 180 value ETF, SSE private enterprise ETF and SSE State-owned Enterprise ETF. According to different weighting methods, the indices tracked by ETFs listed on the Shanghai and Shenzhen Stock exchanges can be roughly divided into market-cap weighted indices, fundamental weighted indices and equal weighted indices. Market capitalization weighted index, that is, according to the market value of the listed or the market value of the distribution of weight, this kind of index can well reflect the overall trend of the market. But in this way, as a particular price rises, it has more and more impact on the index, so it is easy to overinvest in high valuations and reduce the status of low valuations in the index. The fundamental weighted index, that is, when setting the investment weight, it no longer relies too much on the stock price, but considers more fundamental factors of the enterprise, such as corporate cash flow, operating income, net profit, net assets, dividends, etc., which can better reflect the operating conditions and profitability of the enterprise. Equal weight index, that is, gives equal weight to each of the indexes. Compared with the market capitalization weighting method, it pays more attention to the role of small and medium-sized enterprises in the index. In other words, if investors are more optimistic about small and medium-sized enterprises in the constituent stocks, they can choose equal weight index fund. Focus on volatility, liquidity and valuation levels of indices and ETFs In general, ETFs that track low volatility indices are less risky to invest in, but volatile indices and ETFs are more attractive to investors who trade short-term index trends. The liquidity of ETFs is also crucial for this type of investor, and actively traded ETFs are more conducive to investors to choose the time to enter and exit at any time. In addition, ETF investors who make long-term investments must examine the valuation level of the index, such as comparing the P/E ratio of the index with the historical level, or horizontally comparing the P/E level of different indexes, in general, choosing the more "cheap" index is more likely to improve the investment safety margin.