New Era, New Index: A500 ETF Launches with Significance
What is the most significant ETF product in the second half of 2024?
It must be the CSI A500 ETF!
On September 6th, Harvest CSI A500 ETF (subscription code: 159351) became the first batch of broad-based ETFs approved to track the CSI A500 Index in the entire market.
The CSI A500, as the first important broad-based index after the release of the new "Nine National Policies" in April 2024, holds extraordinary significance.
Although it is a new member of the broad-based index family, the CSI A500 is of epoch-making importance.
In addition to covering high-quality assets with one click, it also has a more balanced industry composition among its constituent stocks due to its up-to-date compilation methods and distinctive advantages, significantly increasing the "content" of new productive forces while enhancing the proportion of emerging industries.
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It is precisely because of the many advantages of the CSI A500 Index that it has created unprecedented enthusiasm in the market even before its official release, attracting particular attention from investors.
Firstly, why is it called the "first"?
This is because it is the first major broad-based index after the new "Nine National Policies," carrying the market's high expectations for the A-series index.
In April 2024, the new "Nine National Policies" explicitly mentioned ETFs for the first time, stating "to establish a fast-track approval channel for exchange-traded funds (ETFs) and promote the development of index-based investment," after which the supply of indices and ETF products has been continuously enriched.
The rapid approval and issuance demonstrate the importance of the CSI A500 Index.
On August 27th, the CSI Index Company officially announced that the CSI A500 Index would be officially released on September 23rd; on September 6th, the first batch of ETF product tracking lists was released; and on September 10th, the public fundraising began.
Secondly, why is it considered a representative of "new productive forces"?
The CSI A500 selects 500 securities with larger market value and better liquidity from various industries as index samples, covering more industry-leading stocks and having a broader coverage, thus having a stronger overall market representativeness.
It is difficult to intuitively understand the differences between the CSI A500 and other indices from the official description, but a detailed look reveals that the industry distribution of the CSI A500 Index is similar to that of the CSI Total Index, which is different from the high proportion of financial and major consumer industries in the constituent stocks of the CSI 300 and CSI 800.
According to the disclosed sample stocks, the latest sample covers all 35 secondary industries and 92 tertiary industries of the CSI, prioritizing the selection of leading companies in the tertiary industry, and including more outstanding companies in emerging industries such as information technology and biomedicine.
Looking at the sample stocks, the combined weight of emerging industries such as industry, information technology, communication services, and health care is about 50%, higher than that of existing comparable broad-based indices.
Compared with the CSI 300, the CSI A500 focuses more on large-cap stocks, covering 57.18% of the market value of A-shares and more than 75% of A-shares with a market value of over 100 billion.
This means that while focusing on industry balance and emphasizing emerging industries, it can also represent China's core assets.
Moreover, compared with existing broad-based indices, the compilation of the CSI A500 combines advanced domestic and foreign experiences, making the industry market value distribution of the index samples and the sample space as consistent as possible, which can reflect the industry structure characteristics and macroeconomic conditions of the A-share market from multiple dimensions, and has high representativeness.
Thirdly, why is it called "connected"?
The CSI A500 achieves "interconnection" in the scope of stock selection, which is also a common feature of the current CSI A-series indices.
Simply put, the constituent stocks of the CSI A500 are selected from the targets of Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect, which can connect to the global capital market.
At the same time, screening conditions such as negative exclusion of ESG are also conducive to the allocation of A-share assets by domestic and foreign long-term funds.
In summary, the CSI A500 Index has a comprehensive representativeness and growth potential facing the high-quality development stage of China's economy.
As an index facing the future and focusing on high-quality economic development opportunities, "first," "new quality," and "connection" are indispensable.
Taking the previously released CSI A50 Index as an example, the first batch of ETFs tracking this index raised a total of more than 16.5 billion yuan.
Data shows that as of the end of August, the total scale of the 10 CSI A50 ETFs has exceeded 30 billion yuan, which has been widely recognized by funds.
The CSI A500, as a more comprehensive A-series benchmark index, has the ability to invest in China's core leading standards with one click, and its industry coverage is balanced and extensive, which is conducive to further diversifying risks and is expected to carry more funds into the market.
Moreover, as the Federal Reserve's interest rate cut cycle begins, funds are expected to flow back to global emerging markets.
The broad-based index ETFs with connectivity represented by the CSI A500 have room for appreciation.
The advantage logic of the CSI A500 is very clear, but how to choose a broad-based index product requires considering two major principles: first, choose a comprehensive large platform; second, choose a platform with strong cross-market broad-based investment strength.
Why?
Because broad-based index investment is most important to consider the following capabilities: first, cross-market replication ability, which can reduce tracking errors as much as possible; second, excess return ability, which relies on the overall investment research strength of the platform; third, liquidity guarantee, which is a consideration of the platform's comprehensive strength.
Therefore, the platform's comprehensive service ability, strategy ability, and product operation ability are all standards that should be measured when choosing broad-based index ETFs.
So how to choose the most suitable platform from the first batch of many fund companies?
Although the CSI A500 is an emerging index that has not yet been released, it can be referred to as a cross-market broad-based index product with a large scale, strong liquidity, long operating time, and high representativeness, such as the CSI 300 ETF, among which the outstanding manager, Harvest Fund.
Harvest Fund, as one of the earliest fund companies to layout index business in the public offering field, has become a major player in the industry with years of accumulation.
It has a comprehensive product line, with a full range of products from broad-based, style to high-growth sub-industries, which is convenient for investors to carry out comprehensive configuration operations, such as the core position of broad-based ETFs as the base, and the satellite enhancement of industry ETFs.
Especially in the fiercely competitive broad-based track, Harvest Fund has been at the forefront of the industry with its continuous product strategy and strategic innovation, creating many "firsts."
It has laid out several first/first batch of index funds such as Harvest CSI 300 ETF, Harvest CSI 500 ETF, Harvest CSI A50 ETF, among which Harvest CSI 300 ETF (159919) has a scale of over 100 billion yuan, ranking first in the Shenzhen Stock Exchange.
Harvest Fund has rich experience in cross-market ETF investment and operation, and pays great attention to key broad-based indices such as the CSI A500, which can be described as "having the heart and the strength."
It is precisely because of Harvest Fund's own strength that it has become the preferred choice for key broad-based indices and is also an excellent choice for the first batch of A500 ETFs this time.
Harvest CSI A500 ETF (159351) can be used as a tool for comprehensive layout at a low point, and it is also suitable for investors to face the future new quality and new momentum of long-term bottom position configuration.