A rare hit in the contrarian market, the first batch of SZSE 50 ETFs were listed!
Text | Jinning
"Difficult" is the biggest feeling of almost all investors this year. For example, the public funds that have attracted much attention in the past few years have only 960.5 billion new funds in the first 11 months of this year, of which bond funds account for 70% and have become the absolute mainstream. In contrast, 124.1 billion new shares were issued by equity funds, accounting for less than 13%, and the average size of a single fund raised was only 400 million.
But thinking about it the other way, people can't help but wonder, this 124.1 billion is not a small amount, what kind of equity fund still retains a certain attractiveness?
Looking further, the newly issued ETFs that track the SZSE 50 Index (with an average single ETF raising size of 2.5 billion shares) and the Science and Technology Innovation 100 Index (with an average single ETF raising size of 1.8 billion) have attracted much attention from the market. (Data source: Wind, 2023.1.1-2023.11.30)
1. The SZSE 50 has performed well for a long time
The SZSE 50 Index is used to characterize the stock price fluctuations of 50 companies with large market capitalization, strong industry representativeness and good corporate governance, and was officially released by the Shenzhen Stock Exchange on October 18 this year, positioning it as the flagship broad-based index of the Shenzhen Stock Exchange in the context of high-quality economic development.
Next, focusing on the performance of the index, the SZSE 50 has risen by 551.85% since the base period (December 31, 2002), with a compound annualized rate of 9.37%, and the bull market is more aggressive and can repeatedly hit new highs, reflecting the high long-term investment value of the core leading companies in the Shenzhen Stock Exchange.
Compared with the mainstream domestic indexes, the CSI 300 has comparable data, with a cumulative increase of 215.27% over the same period, significantly underperforming the SZSE 50.
Compared with overseas mainstream indexes, the SZSE 50 has achieved excess returns of 91.27%, 132.67% and 261.51% against the German DAX, S&P 500 and Nikkei 225 respectively, even in the face of the strong Nasdaq index most of the time.
Since the end of 2002, the performance of the SZSE 50 has been no less than that of mainstream domestic indices
Source: Wind, 2002.12.31-2023.11.30, Past performance of the index is not indicative of the future, investment should be cautious
2. Why is SZSE 50 so impulsive?
To explore the performance of SZSE 50 with high elasticity and high growth, you may wish to start with the index compilation. The compilation scheme of SZSE 50 is different from the two dimensions of "large market capitalization + liquidity" of traditional broad-based indexes, but takes a characteristic route: firstly, it will eliminate stocks with poor turnover and low ESG ratings, secondly, the sample stock market should reach the top three levels in the industry, that is, "the best of the best in different industries", and finally, the constituent stocks with high scores in "corporate governance" will be prioritized.
Following this arrangement, SZSE 50 exhibits the following characteristics:
1. Bringing together the leaders of emerging industries can reflect the dynamic changes of the mainland's economic and industrial structure to a certain extent. The SZSE 50 covers emerging industry leaders in many different fields, including electronics, power equipment, medicine and biology, food and beverage, household appliances, and computers, which are the top six constituent industries, accounting for more than 60%, and are also typical representatives of emerging economies.
The industry distribution of the constituent sectors of the SZSE 50
Data source: Wind, as of 2023.11.30, the industry standard is Shenwan's first-class industry
2. The fundamentals of the index constituent stocks are better. SZSE 50 has both high earnings quality and performance growth, and has good growth potential. In terms of profitability, the average return on equity (ROE) of SZSE 50 constituent stocks in 2022 is about 20%, and in terms of earnings growth, the median annual compound annual growth rate of net profit of SZSE 50 constituent stocks in the past three years is about 24%, which is significantly better than broad-based indices such as SZSE Component Index, SSE 50 and SSE Index.
Median CAGR of net profit of constituent stocks over the past 3 years
Source: Wind, as of 2023.11.30
3. Focus on corporate governance and ESG factors, and the constituent stocks have good sustainable development capabilities. The average ESG score and corporate governance score of the constituent stocks of the SZSE 50 Index reached 7.40 and 7.68 respectively, significantly higher than the average of 5.75 and 6.08 of all A-shares. (Data source: Wind, as of 2023.11.30)
3. The first batch of SZSE 50 ETFs were listed, adding another weapon to the bottom allocation
However, it should be reminded that the SZSE 50 is relatively elastic, and it is necessary to be mentally prepared for this feature. However, the upside is that the ETF of the index also highlights the trading value due to its high elasticity, especially when the market is biased towards growth style and bear-bull transition stage, the SZSE 50 often shows a high degree of elasticity, which can be described as a powerful tool for contrarian layout in the current market bottom area.
The good news also followed, today (December 11), the first batch of SZSE 50 ETFs such as SZSE 50 ETF E Fund (159150) were officially listed on the Shenzhen Stock Exchange.
If you are Xi to buying over-the-counter funds, you can also continue to pay attention, after the listing of SZSE 50 ETF, SZSE 50 ETF feeder fund is expected to be issued soon, providing you with professional and efficient allocation tools to share the development results of A-share high-quality assets.