What does the fundamental index mean? Many new investors don't know what the fundamental index is, what its stock selection rules are, and how to buy it. Here is a brief explanation of the concept of the fundamental index, hoping to help you.
The fundamental index, which originated in the United States, was developed in the last decade to select a basket of enterprises with good business fundamentals.
The selection principle of the fundamental index: the enterprise status is comprehensively investigated from four dimensions, and the scores are given in four aspects.
1. How about the business income of the enterprise
2. Cash flow status of the enterprise, whether there is sufficient cash flow
3. Net assets of the enterprise
4. Corporate dividends
The fundamental index is to comprehensively review the above four points of an enterprise and give a score to these four aspects. If the score is in the forefront of similar industries, the company's fundamental score will be very high and will be included in the fundamental index. This is the stock selection rule of the fundamental index.
What are the differences between dividend index and fundamental index?
In the United States, dividend index and fundamental index are competitive. These two types of indexes are the fastest growing indexes in recent decades. We can easily expand our investment scope to overseas markets by mastering these two types of indexes.
At present, there are three types of common fundamental indexes in China:
Fundamentals 50 Index: select the 50 enterprises with the highest fundamental scores in Shanghai and Shenzhen Stock Exchanges
Fundamentals 60 Index: select the 60 enterprises with the highest fundamental scores in Shenzhen Stock Exchange
Fundamentals 120 index: select the 12 enterprises with the highest fundamental scores in Shenzhen Stock Exchange
The Fundamental50 Index selects stocks from the Shanghai and Shenzhen Stock Exchanges. All of the large number of listed banking companies in the Shanghai Stock Exchange have relatively high fundamentals, so the Fundamental50 Index is incorporated into a large number of banking stocks. There are fewer bank stocks in the 60 index and 120 index of fundamentals, but there are more manufacturing companies such as Gree.
The constituent stocks of the 60 index of fundamentals are all included in the 120 index of fundamentals. The similarity between the two is very high. We only need to choose one of them when investing.
Index funds tracking fundamental 50 index: Harvest fundamental 50 on/off the market
Index fund tracking fundamental 60 index: CCB SZSE 60ETF on the market, and CCB SZSE 60 link off the market
Index funds tracking the 120 index of fundamentals: Harvest Shenzhen 120 ETF on the market, Harvest Shenzhen 120 Link off the market
