Buffett Pushed Again To Provoke The Mainland'S Argument: Income Weakness Still Lies In Institutional Layout.

Recently, at the Buffett shareholders' meeting in 2020, Buffett, as always, suggested that ordinary investors should buy the S & P 500 Index Fund.

The famous "ten year gambling agreement" set up by Buffett in 2005 has been relished by people. Buffett believes that most hedge funds in the United States do not win the S & P 500 index in ten years' scale. In 2007, Ted Sidse Ted Seides, the founder of Prot g, took the bet. He chose 5 funds in the fund, which had more than 200 hedge funds' rights and interests in the 5 funds.

10 years later, Buffett won the battle.

The gamble opened the golden age of passive index investment. From 2008 to 2018, the market share of passive trading in US equity funds rose to 45%.

The famous "ten year gambling agreement" established by Buffett in 2005 has been relished. IC Photo

Performance comparison

So is Buffett's view of buying index funds applicable in China?

According to Wind data, as of May 6, 2020, the average return of stock passive index fund was 12.07%, 3.71% and 13.93% respectively in 1, 2 and 3 years. In contrast, the average return of general equity funds is 34%, 25.48% and 41.28% respectively.

In contrast to this comparison, the performance of A share active funds is much higher than that of passive index funds.

From the perspective of wide base, the latest net worth of Huatai berry Shanghai and Shenzhen 300ETF, which was founded in May 2012, is 3.9245 yuan. The annual net value increase ranks 55 in the same 118 funds. The 5 year growth rate ranks 113 in the 239 similar funds, and keeps about about the middle, about the average income.

However, the index fund has a serious division in the industry, but the industry index fund standing on the "tuyere" has a very good performance. For example, the investment in Zhong Zheng liquor has a net value of 0.9806 in May 6th and a gain of 107.58% in the past 3 years. This performance ranked first among the 486 similar funds, and won the overwhelming majority of the active funds in the market.

So, is the A index the index fund or the active fund?

In the mature market of the United States, because most investors are institutional investors, it is very difficult to win the index. Index funds are equivalent to the market's average return. And the management fees and transaction costs are less.

In China, active funds are also faced with relatively high management fees (the average management fee of the active management fund is 1.48%), and the relatively high turnover rate brings about the phenomenon of dilution of transaction costs.

"In the A shares, choose good stocks, do well in position control, in fact, you can beat the index. A shares can see that most of the active investment funds have won the index. Although the gem index and Shenzhen index have seen a certain increase, the performance of the active fund is still better. Of course, there are some active fund with poor performance. Yang Delong, chief economist of Qianhai open source fund.

Zhang Ting, a fortune researcher, pointed out that for the A share market, due to the fact that it has not yet entered the mature stage, the market has certain excess return space. From the past ten years, the stock and hybrid funds index has outperformed the wind A index, indicating that it has certain excess Alfa capability in the Chinese market. Strong fund managers can still earn relative index excess returns.

"With the improvement of the A share market system and the gradual increase in the proportion of institutions, the future excess earnings space will gradually shrink." Zhang Ting said.

Zhang Ting believes that for index funds, active funds, star funds, each type of funds suitable for investors there is a certain difference.

For index funds, the broad base index is suitable for investors with long-term fixed investment (large net value elasticity, automatic index adjustment, and large bull market). The industry and thematic index funds are suitable for investors who have certain research ability in these fields.

In the case of active management funds, investors need to study and analyze fund managers more deeply, so as to select good fund managers. The performance of active management funds is very different. It is particularly important to select good fund managers.

The biggest problem of the fund is whether the buying time is high or whether the fund manager's sudden increase in management will affect the fund's performance. Therefore, if the fund manager's historical management experience is better, he has the experience and ability of managing large funds, and the timing of raising or subscribe is relatively low, so investors can choose.

Huang Ruiqing, general manager of the time index and quantitative investment department, believes that ETF is not the best, only the most suitable tool.

"Some people in the market look at valuations. Some people look at the trend. Which one is better? This is entirely different from person to person, not the best, only the most appropriate. Huang Ruiqing said.

At present, the index fund wide base is more popular, for example, Shanghai and Shenzhen 300. From the perspective of fund type, we can match half of the active fund and half the index fund. In this case, the allocation is relatively reasonable. In the A share, a good active fund can still beat the index. " Yang Delong suggested.

Explosive growth

In November 2002, China's first index fund Huaan 180 Index enhanced securities investment fund was released.

Since then, index funds have been accepted by more and more domestic investors.

Guotai Junan Securities pointed out that China's index funds developed very fast. In the past five years, the composite growth rate of China's passive investment funds reached 21%, of which the scale doubled in 2019 and entered the fast lane of development.

And Shen Wan Hongyuan securities latest data show that in the first quarter of this year, the index fund scale has gone against the market high, especially the technology theme ETF sales are hot. The scale of 2020Q1 index fund has reached 1 trillion and 340 billion yuan. By the end of the first quarter of 2020, 789 index fund assets in the market totaled 1 trillion and 341 billion 777 million yuan (excluding ETF linked funds), an increase of 77 billion 864 million yuan from the end of last quarter, and an increase of 6.03% in the ring.

In the first quarter, all types of index funds were net purchase status, and the overall size increased by 107 billion 600 million yuan due to net purchase. Among them, ETF has the highest net purchase value of 87 billion 810 million yuan.

In addition, a total of 40 index funds were set up in the first quarter, raising a total of 48 billion 814 million yuan. Among them, the ETF sales of science and technology are hot, Huaxia new energy vehicle ETF, Huaxia card semiconductor chip ETF, Yinhua Zhong Zheng pharmaceutical industry ETF scale of raising 10 billion 760 million yuan, 5 billion 390 million yuan, 4 billion 920 million yuan respectively, ranking the top three.

In recent years, the explosive growth of domestic index funds, especially the ETF fund, has something to do with the transformation of fund companies.

A fund company senior executive said that as a bank fund company, the company had mainly focused on fixed income products, and is currently in transition, increasing the layout of equity products, mainly through the development of "instrumentality" index funds. In particular, we should vigorously develop the layout of the ETF fund.

A number of fund companies interviewed by reporters said they are vigorously developing the ETF fund. Some want to have a comprehensive layout, others want to develop ETF or ETF.

In fact, various fund companies are issuing index funds. The first base advantage and the leading edge of the broad base index are very obvious. The industry index and smart beta will become the targets of competition among the fund companies.

It is worth mentioning that, with the sharp fluctuations in the A share market, the main broad-based index of the market in the first quarter of this year has dropped completely except the gem index. The net value of various index funds has declined, and the net value changes have reduced the assets of the index fund by 76 billion 230 million yuan.

"At present, the valuation of major indexes of A shares is in the middle of history, and the index funds have greater investment value for 1-2 years. In the short term, the A shares have limited downlink space and the top space has a top stage, and the index type opportunities are relatively smaller, but the opportunities for individual stocks are relatively larger. Therefore, if investors hold a relatively short period of time, it is recommended to choose high-quality active management funds. If holding time is longer, they can choose index funds for long-term holding or fixed investment. Zhang Ting thinks.

If it is held for a long time, Zhang Ting suggests that ordinary investors choose broad base index, such as index 500, Shanghai and Shenzhen 300, gem and so on. If there is industry experience, investors suggest choosing index funds.