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Views 2738 Aug 9, 2023

opens up a new world of investment after contact with index, QDII and ETF

In"in the campaign to choose a base, investments that only look at the returns are all hooligans."Niuniu introduced the four most common types of funds-stock funds, money funds, bond funds and mixed funds. But in practice, the fund world is far more complicated than this, and all kinds of games emerge one after another, and we have to marvel at the extraordinary posture of all kinds of financial bosses even to make money.

Today Niuniu will take you to open the advanced game of fund investment and explore what these psychedelic letters represent.

01 Buffett's strict selection: index Fund (Index Fund)

Buffett, the "god of stocks" who never recommended stocks and funds in public, only opened a window for index funds. This can't help but make Niuniu wonder what kind of money-picking artifact is the index fund advocated by Buffett many times.

Conceptually, index funds invest in index stocks. Different from the four types of funds introduced before, index funds belong to the category of passive investment. Fund managers allocate the variety and proportion of securities they hold according to the formulation method of the index, such as the S & P 500 and Shanghai and Shenzhen 300. Build an investment portfolio that is exactly or basically the same as the index. To put it simply, as long as the index tracked rises, so does the net value of the index fund.

According to the "efficient market hypothesis" put forward by Nobel laureate Eugene Fama, in an efficient market, because information is equal to every investor, it is impossible for any investor to obtain excess returns through information processing, that is, information cannot be used to make a profit in the market. That is to say, no one can use information to beat the market. Ignoring the Bug hidden in this theory, in practice, it takes extraordinary ability and luck to be able to outperform the market for a long time. So the advantage of index funds that track specific indices is self-evident-since the market is hard to beat, why not just invest in it?

In fact, the surprise of investing in index funds is much more than that.On the one hand, the management cost of index fund is relatively low.. Due to the passive investment strategy of index tracking, fund managers do not need to spend a lot of energy on research, so the cost is lower than that of active funds. In the long run, a small difference in costs will have a significant impact in the case of compound interest.On the other hand, the performance is more transparent.The change of the net value of the fund can be roughly judged according to the rise and fall of the target index.

But index funds share the same fate with the market.For short-term operations, the risks are high. Any index fund is in a high position and cannot avoid risk in time through the operation of the fund manager.So if you have the misfortune to encounter a bear market, investors will have to feel the extreme sadness of freefall.

In short, as a low-cost, open and transparent product, index fund is suitable for Xiaobai to make long-term investment. But if you don't have the patience and want to operate in a short term, you'd better go away.

02 A close relative of the stock? ETF Fund (Exchange Traded Fund)

I do not know since when, traded open-index funds (ETF) frequently appear in the field of vision of investors, and gradually become a popular global investment weapon. Although wearing the vest of the fund, but from the point of view of operation, it has a vague relationship with stocks.

ETF is a kind of fund that tracks the changes of the "underlying index" and is listed on the stock exchange. It has the "pedigree" of the index fund, so ETF also belongs to the passive investment mode. The fund manager passively decides the portfolio according to the composition of the index stocks.

At the same time, investors can trade like stocks and get basically the same rate of return as the index they track, and the net value of ETF is determined by the price of a basket of stocks they hold.

So how to participate in the ETF transaction? Different from traditional funds, there are two ways to invest in ETF: buying and selling in the secondary market and redemption in the primary market. However, due to the high trading threshold of ETF in the primary market, it is only suitable for professional investors. Therefore, most people will choose to buy and sell in the secondary market, the simple understanding is to open a securities account, you can buy and sell ETF at any time in the market, and the trading price changes in real time according to the market, which is as convenient and simple as buying and selling stocks.

ETF inherits the advantages of low transaction cost, diversified investment, high transparency and simple operation of index funds. At the same time, it also has high liquidity that the general index fund can not match. ETF combines the characteristics of stock trading. Compared with the general open index fund, it can trade in real time like stocks, grasp the price at any time, and MAX flexibility.

Although ETF will not rise and fall as sharply as individual stocks, it will also lose a lot of money if its investment strategy is wrong, especially in the midst of a stock market crash. Therefore, any investment has risks, and ETF will not violate this law.

03 Global Gold: QDII Fund

Want to invest in overseas assets, but feel helpless because of restrictions such as investment channels, jet lag, trading mechanisms, policies, and so on? At this time, the QDII fund has become an excellent choice for rookies.

The full name of QDII is Qualified Domestic Institutional Investors (qualified domestic institutional investor), and QDII fund is the fund issued by these institutional investors, that is, the securities investment fund set up in China and approved by the relevant departments of the state to engage in the securities business of stocks, bonds and other securities in the overseas securities market. The simple understanding is that a fund is set up at home to invest abroad.

QDII funds have a wide range of investments, including global stocks, bonds, commodities, financial derivatives and so on. Individual investors can realize the global allocation of assets through this fund. Because of the wider scope of investment, the fruits of global economic growth can be shared through different types of allocation. At the same time, QDII funds spread the systemic risk of the single market, which helps to optimize the asset allocation structure.

The repeated nagging phrase of Niuniu appears again, "the risks and benefits are the same." Since QDII has the global ability of Nuggets, it is bound to be in danger of being hanged by global capital. As QDII invests in overseas markets, it not only faces the general risks of traditional fund investment (market volatility risk, management risk, etc.), but also bears some blows from the global financial market. Among them, the most menacing are overseas market risk and exchange rate risk.

On the one hand, QDII funds are affected by the market factors of the investing countries or regions, which may lead to unexpected changes and losses, and the global black swan events and changes in the economic situation will have an impact on the returns of the fund. On the other hand, the exchange rate is a double-edged sword. Most QDII funds invest in foreign currencies, and they need to exchange RMB for pricing and settlement. Therefore, when the RMB appreciates, the net value of the fund will be impacted accordingly, and the performance is lower than the actual investment capacity.


Conclusion

Today Niuniu takes you to further explore the new areas of the fund. Index funds, ETF and QDII funds, which have gradually become new favorites of investment, give investors new ideas to make money, but the risks are also something to be reckoned with. When investing, you should match your investment characteristics with product characteristics and choose the one that best meets your needs.

Disclaimer: The above content does not constitute any act of financial product marketing, investment offer, or financial advice. Before making any investment decision, investors should consider the risk factors related to investment products based on their own circumstances and consult professional investment advisors where necessary.

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