In the first few days of this year, the CSI 500 and 1000 indices fell more than the broader market, are their products risky?
Executive Summary:
In fact, in the long run, the CSI 500 Index, which represents small-cap stocks, is likely to perform better than the broader market. If you buy the CSI 500 ETF on the last day of 2022 and hold it until January 9, 2024, the Shanghai and Shenzhen indices have a weighted decline of about 41% during this time, but the CSI 500 has fallen by 14%, outperforming the market by 27 percentage points.
Recently, many people have said that they should pay attention to the risks of ETFs such as CSI 500 and CSI 1000, on the grounds that after entering 2024, they will fall more than the broader market.
For example, this netizen reminded the CSI 500 and other risks: "There is a risk notice, you can pay attention to it." Many people have been watching the Shanghai Composite Index fall below 2,900 points recently, but they have not noticed the CSI 500 and CSI 1000. Both indices have been very bad in recent days, both of which are new stage lows. Unlike everyone thinks that it will rebound, maybe these two indices and their corresponding stocks will be a little troublesome recently."
Indeed, since the beginning of 2024, as of January 9, the CSI 1000 Index closed at 5,553.3 points, down 5.67% in the six trading days after the year, and the CSI 500 Index closed at 5,180.65 points, down 4.58% over the same period.
In the same period, the Shanghai Composite Index closed at 2,893.25 points, down 2.7 percent, the Shenzhen Component Index closed at 8,971.72 points, down 5.8 percent, and the Shanghai and Shenzhen Indices fell 4.4 percent according to the weighted average trading volume of the two cities.
Judging from the situation in the past six trading days in 2024, the CSI 500 and CSI 1000 indices have fallen by 0.18 and 1.27 percentage points respectively compared with the decline of the Shanghai and Shenzhen weighted indexes. There is a risk.
According to this logic, many of the income certificates issued by various brokerages that are bound to the CSI 500 and CSI 1000 must be lower than the market. That's a bit of a bad thing.
In order to reflect the overall performance of stocks of different sizes in the market, CSI Index Co., Ltd. has built a large-cap, mid-cap, small-cap, large-mid-cap, small-cap and large-medium-cap and large, medium and small cap indices based on the CSI 300 Index, providing the market with rich analytical tools and performance benchmarks, and laying the foundation for the research and development of index products and other indexes. It comprehensively reflects the overall situation of small-capitalization companies in the Shanghai and Shenzhen securities markets.
Of course, as quantitative stock strategy products, CSI 500 Index Increase and CSI 1000 Index Increase have their own characteristics.
Under the complex market environment and volatile structural market this year, how are quantitative stock products such as CSI 500 Index Increase and CSI 1000 Index Increase performing, and are they worth holding?
Saburo believes that judging this issue must not be based solely on the data of 6 trading days. Since we all know that the market style has changed quickly in the last year or so, there are too many fortuitous factors contained in the 6-day data. Because according to the statistical observation series, at least more than 30 samples, that is, more than 30 trading days, can be basically representative of the performance of the observation.
According to the Shanghai Composite Index, Shenzhen Component Index, turnover of the two cities, and the CSI 500 Index obtained from Xueqiu from 2021 to the present by the Bull Riding Research Institute, Saburo found that in fact, the performance of the CSI 500 Index, which represents small-cap stocks, is likely to be better than the broader market after long-term observation.
In 2021, the weighted average of the CSI index rose by 3.6%, but the CSI 500 index rose by 15.28%, which is 4.24 times that of the former.
In 2022, the weighted average of the Shanghai and Shenzhen indices fell by 21.1%, but the CSI 500 Index fell by only 16.59%, 4.51 percentage points less than the former.
In 2023, the weighted average of the Shanghai and Shenzhen indices will fall by 13.4%, but the CSI 500 index will only fall by 7.4%, which is 5.98 percentage points less than the former.
Friends who invest in stocks have experienced that most people can't actually outperform the market. Generally speaking, there are only three ways for retail investors to outperform the market:
First, you belong to one in 1,000 people who have practiced in previous lives and have been lucky, and you can often catch stocks with a daily limit.
Second, spend time to learn Xi investment skills from professional stock market experts, find the right teacher to learn seriously, and the income will definitely be good.
Third, buy small-cap ETFs such as CSI 500 and CSI 1000, judging from the historical data of the last three years, if you buy CSI 500 ETF on the last day of 2022 and hold it until January 9, 2024, the Shanghai and Shenzhen indices have a weighted decline of about 41% during this time, but the CSI 500 has fallen by 14%, outperforming the market by 27 percentage points.
[Author: Xu Sanlang]