Bonus index is an important index. We sometimes prefer dividend index when investing, but is dividend index good? What are the advantages and disadvantages of dividend index and what kind of investors are suitable for? Here is a brief explanation for you.
Many friends say that they prefer dividend index, but does dividend index have shortcomings? Let's first look at the advantages of dividend index:
1. Compared with other index funds, the average fluctuation of dividend funds is smaller;
2. The dividend category also has dividend cash flow, which can be obtained without selling fund shares.
The bonus category is very suitable for beginners to choose.
However, the disadvantage of dividend varieties is that in some periods, the investment varieties of funds will be too concentrated in certain industries. For example, from 2007 to 2008, the steel industry performed well with high dividends, and the dividend index was included in more steel enterprises As a result, the constituent stocks are too concentrated in a certain industry, which will increase the volatility of the index, thus increasing the difficulty for investors to hold patiently. We know that it is not difficult to invest in index funds, but it is difficult to persist in long-term investment, so the greater the volatility, the fewer people will be able to persist. The dividend index will concentrate on investing in a certain industry or several industries in a certain period of time, resulting in relatively large fluctuations.
Has the valuation of dividend index always been low?
Many investors will ask: the valuation of dividend index is lower than other indexes in value. Is it always so low?
The low valuation of dividend index is mainly due to the fact that not many domestic listed companies have formed the dividend habit, the overall dividend ratio of A-share is lower than that of mature markets, and A-share investors have not yet realized the benefits of dividend products. Like the more mature European and American markets, the valuation of dividend products is higher than the average value of the market, and A-shares will also move in this direction in the future.
