I believe that everyone knows the index fund better. It is a fund that takes a specific index as the tracking object and tries to replicate the performance of the index. But in fact, there are two types of index funds: passive and enhanced.
The goal of passive index funds is to reduce as much as possible the error with the tracked index. The index-enhanced fund is different. It seeks excess returns on the basis of the general trend following the index. In other words, it has both a tracking index part and a part that needs to be actively managed.
Essence Quantitative Selection CSI 300 Index Enhanced A is a stock index enhanced fund. So, how does it perform?
Excellent historical performance, effective enhancement
The Shanghai and Shenzhen 300 Index is one of the most classic indexes. It is a broad-based index. It is characterized by a wider coverage of constituent stocks and higher stability of constituent stocks, which reflects the overall outlook of the A-share market.
As an index-enhanced fund, Essence Quantitative Select CSI 300 Index Enhanced A means that it mainly invests in the constituent stocks and alternative constituent stocks of the CSI 300 Index. But at the same time, in order to achieve the goal of enhanced returns for index-enhanced funds, a small amount of investment in some non-constituent stocks, bonds and other financial assets is also within the allowable range.
Different from active stock funds, index-enhanced funds are like dancing in shackles. Compared with passive index funds, they must take on the important task of “expanding territory”.
From the data point of view, in April 2019, Essence’s new starting point for flexible allocation of mixed funds was transformed from a hybrid fund to an index-enhanced fund through a resolution, and was renamed Essence Quantitative Selection CSI 300 Index Enhancement, and it is also divided into Class A shares. And C share. Since then, on May 7, 2019, fund manager Xu Huangwei has been in charge of the fund alone until today.
Judging from the performance after the transformation, Essence Quantitative Selection CSI 300 Index Enhanced A has outperformed the CSI 300 Index for two consecutive years. In 2020, it has created an excess return of 23%.
Essence Quantitative Selection CSI 300 Index Enhanced A’s performance data source: private equity rankings (the fund’s past performance does not indicate its future performance, and the performance of other funds managed by the fund manager does not constitute a guarantee of the fund’s performance. Market risk, the investment need to be cautious.)
Anxin Quantitative Selection of Shanghai and Shenzhen 300 Index Enhancement A’s fund style tends to be offensive, and at the same time has a certain defensive ability, the style remains stable for a long time, less deviation.
Essence Quantitatively Selected Shanghai and Shenzhen 300 Index Strengthens A’s Fund Style
Data source: private placement row net
Judging from the fund’s position in the fourth quarter of 2020, it is basically in line with the statement in the product information summary, that is, the proportion of stock assets is not less than 80% of the fund’s assets, and cash or maturity of not less than 5% of the fund’s net asset value is maintained. Government bonds with a date within one year.
Anxin Quantitative Selection CSI 300 Index Enhanced A’s Holding Proportion (Fourth Quarter of 2020) Data Source: Private Equity Ranking Network
At the same time, Essence Quantitative Select CSI 300 Index enhances the proportion of A holding stocks is relatively high, close to 90%. Among the bonds, the 20 government bonds 01 accounted for the highest proportion, reaching 4.15%, and the other held a lower proportion of convertible bonds.
Can the index increase this year continue to give play to its advantages?
How much excess returns an index-enhanced fund can obtain depends on the role of the fund manager. It requires fund managers to make new entries, select stocks, and withdraw trackable indexes. It tests the full capabilities of fund managers.
However, because Anxin Quantitative Selection CSI 300 Index Enhanced A is a quantitative index enhancement product, it will be different from traditional index enhancement products. It is mainly used to optimize the portfolio through a quantitative model, and strive to control tracking errors. Get investment income that surpasses the underlying index. The main task of fund managers is to discover factors, analyze factors, and build corresponding quantitative models.
Fund manager Xu Huangwei has 12 years of investment research experience. Since November 1, 2017, he has served as the fund manager of the original Anxin New Starting Point for flexible allocation of hybrid funds. After the official transformation of the fund, it continued to take over the enhancement of the Essence Quantitative Selected Shanghai and Shenzhen 300 Index.
Xu Huangwei has 8 funds under his management, among which are index-based funds, and his area of expertise is stocks. When he looked forward to the 2021 market at the end of 2020, he mentioned: “The growth rate of the CSI 300 in the first half of next year may be better than that of the ChiNext, but it is not sustainable.”
Regarding the industries that are more promising in this year’s market, Xu Huangwei said: “Military industry, new energy and other industries will still be relatively certain industries. New energy, as an industry that has more market space than consumer electronics, will increase rapidly in the short term, but it will grow longer. Look at the potential.”
At the same time, he further expressed his optimism about the auto, parts, and robotics industries led by the economic recovery, as well as the new energy, military, and semiconductor industries related to technology.
Since index funds must follow the index to a large extent, they can enjoy the dividends of economic development or industry development. On this basis, index-enhanced funds can reduce the fund’s retracement by reducing the position when the index retracements, and when the index rises Obtain excess returns and achieve the goal of outperforming the index through long-term accumulated advantages. “Huge accumulation and thin hair” is the norm for index-enhanced funds.
2021 is a critical year for the recovery of the global economy, and China has set an economic growth target of 6%. Although the speed of recovery of various industries is different, the overall trend of the economy will not change. As an index enhancement fund with good historical performance, the follow-up performance of Essence Quantitative Select CSI 300 Index Enhancement A is worthy of our long-term attention.
Reprint indicated source：Spark Global Limited information