Recently, the capital market has been bustling, and broad-based ETF products have been very popular with investors, and at the end of the past month, equity ETFs attracted more than 150 billion yuan of capital inflows. On February 2, stock ETFs "attracted gold" in a single day, with a net inflow of up to 55 billion yuan (data source: Wind).
Driven by the demand for institutional allocation and various funds, the scale of broad-based ETFs has surged: as of the close of last Friday, the scale of broad-based ETFs in the whole market exceeded 900 billion yuan, reaching 903.7 billion yuan, an increase of 57% from the end of 2022 (data source: Wind). In the context of the popularity of broad-based ETFs against the market, another core broad-based ETF product is about to "shine on the debut", and customers who pay attention to industry trends must have noticed the blockbuster news in the industry last Friday: the first batch of 10 CSI A50 ETFs, including Wells Fargo CSI A50 ETF, were officially approved!
The official approval of the A50 ETF indicates that the market may usher in the ETF investment vehicle of the most representative leading enterprises in the A-share market. What are the characteristics of the CSI A50 Index, which has the reputation of being an upgraded version of China's "Beautiful 50", and what is its historical performance?
Read the CSI A50 Index in one sentence
To put it simply, the CSI A50 Index is the first 50 sample index compiled by a local index company and screened by the whole market, and 50 representative large-capitalization leading companies in Shanghai and Shenzhen are selected. The index was officially released on January 2, 2024, and can be described as a more local "beautiful 50".
Compared with the major broad-based indices,
What are the differences between the CSI A50 Index?
Compared with the existing mainstream broad-based indices in the market, the CSI A50 Index introduces compilation factors such as ESG, industry layout, and interconnection:
Introduce the concept of ESG sustainable investment: exclude stocks with CSI ESG evaluation results of C and below;
Preferential selection of large-capitalization leaders by industry: The constituent stocks take into account the dispersion of secondary industries and the distribution of emerging tertiary industries, and ensure that at least one constituent stock of each of the 30 CSI secondary industries is selected to comprehensively characterize the leaders of each industry;
Taking into account the perspective of foreign investors: All the constituent stocks of the index belong to the scope of Shanghai-Hong Kong Stock Connect or Shenzhen-Hong Kong Stock Connect securities, which facilitates the allocation of A-share core assets by domestic and foreign funds.
In other words, the CSI A50 Index can be said to portray the overall performance of the securities of the representative leading listed companies in the A-share industry from a new perspective, and can be said to be a new generation of core asset benchmark index.
What are the highlights of the CSI A50 Index?
On the whole, the CSI A50 Index has the characteristics of excellent long-term performance in the past, balanced industry distribution, outstanding leading characteristics, strong historical profitability and low valuation.
Historically leading the same broad-based index,
Bull markets are more resilient
From the perspective of the index's historical medium and long-term performance, the CSI A50 Index has performed well, rising by more than 28% since the base day of December 31, 2014.
Source: Wind, as of January 31, 2024, the historical performance of the index is not indicative of the future and is not a guarantee of the fund's performance.
balanced industry distribution,
Covering both traditional and emerging industries
From the perspective of the sectors covered, the CSI A50 Index has a balanced distribution of industries, of which food and beverage, medicine and biology, power equipment, and non-bank finance account for a relatively high proportion, which broadly represents the overall market opportunities of the new economy in mainland China.
For example, compared to the MSCI A50 Index, the CSI A50 Index is more diversified, with lower weighting in the banking and electronics sectors, and higher weighting in the machinery and home appliances sectors, while compared to the CSI 300 Index, the CSI A50 Index is more focused on leading characteristics, and the banking sector is less weighted in terms of industry distribution.
Source: Wind, China Securities Index Company, as of January 31, 2024
The large market capitalization attribute is prominent,
Full of faucet style
In terms of constituent stocks, compared with broad-based indices such as the Shanghai Composite Index, the SSE 50 Index and the CSI 300, the CSI A50 highlights the overall leading characteristics of A-shares, and gathers a number of listed companies that are not only in the high-quality track but also belong to the top students. The average market capitalization of the constituent stocks of the CSI A50 Index is 261.3 billion yuan, and the constituent stocks are mainly large-capitalization stocks of more than 100 billion yuan, accounting for 91% of the weight, focusing on the blue-chip market of the large market and highlighting the large-capitalization attributes (data source: Wind, CSI Index Company, as of January 31, 2024).
The top 20 constituents of the CSI A50 Index
Source: Wind, China Securities Index Company, as of January 31, 2024, index constituents are subject to change due to market changes or index compilation rules, and the stocks listed above are for analysis purposes only and do not constitute specific investment advice.
Valuations are low,
Repair space can be expected
At present, the valuation of 48 stocks in the CSI A50 constituent stocks is below the historical center, 44 stocks are cheaper than 80% of the historical time, and 12 stocks have reached the lowest valuation since 2010, with attractive valuation repair space (data source: Wind, as of February 2, 2024).
A-share momentum period,
Why care about broad-based ETFs?
Regarding the investment value of broad-based ETF products at the current point in time, Su Huaqing, fund manager of the quantitative investment department of Wells Fargo Fund, said:
"From the perspective of liquidity, the return of foreign capital is expected, domestic capital continues to flow in sharply, and the overall liquidity of the market has picked up. From the perspective of large capital inflows, large funds frequently bought large broad-based products such as CSI 300 during January, which drove the broad-based indices of some markets to rise during this period. On the whole, standing at the current point in time, with the bottom of the economic boom picking up, liquidity is good for the market, and the introduction of follow-up relevant policies may be expected to drive the market. ”
After reading the highlights and characteristics of this core leading broad-based index, do you understand why the CSI A50 Index is so high expected by the market?
Risk Warning: The market is risky, and investment needs to be cautious. Investors investing in index funds should pay attention to the investment risks of index funds, including but not limited to the deviation of the return of the underlying index from the average return of the stock market, the fluctuation of the underlying index, and the deviation of the return of the fund's portfolio from the return of the underlying index. For specific information about the fund, please refer to the fund offering document to be released at that time.