"More mature thinkers should understand that, both rationally and intuitively, the goal should be to achieve the best combination of risk and return."

Seeking the appropriate balance between offense and defense, pursuing the optimal solution rather than the maximum value, doesn't this align perfectly with the diversified allocation thinking and risk budgeting concept that we have always emphasized?

Not long ago, we mentioned that this time's CSI 500 ETF was "timely," and now it seems to be completely correct, and we are becoming more and more steadfast in this view.

Because whether it is the optimization of the compilation rules or the further improvement of market representation, the CSI 500 that combines both offense and defense may be the optimal investment solution for the current market.

With the official renaming of the CSI 100, the "A Series" index system that is more adaptable to the market and more representative of the future has been initially formed.

There are only two fund companies that have taken the lead in laying out ETFs on the three "A" indexes, and Harvest is one of them. From the perspective of asset allocation and ordinary investors, fund companies that actively layout on high-quality assets are very much appreciated.

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Currently, the Harvest CSI 500 ETF Connect Fund (Class A: 022453, Class C: 022454) is also on sale, providing investors without a securities account with a direct opportunity to access high-quality assets.

The CSI 500 is very much in line with Howard's "just right"

If the Shanghai and Shenzhen 300 emerging industries are not enough, and the leading effect of the CSI 500 is not strong, then the CSI A500, which gathers the leaders of all industries, can be said to have achieved a perfect balance.Especially in many details, it is done "just right":

(1) High coverage of core assets, stronger market representativeness

Compared with the CSI 300 Index, the CSI A500 is also composed of large-scale, high-liquidity targets across the entire market, presenting a large-cap style, with a weight overlap of about 80% between the two.

Compared with the CSI 500, which mainly reflects the overall performance of medium-cap growth stocks in the market, although the names are somewhat similar, the weight overlap between the two is only 15.6%, which also reflects that the CSI A500 has a small part of medium-cap characteristics.

In general, the CSI A500 combines the large-cap value of the CSI 300 and the growth characteristics of the CSI 500, representing the A-share market more and having the meaning of a Chinese version of the S&P 500.

Compared with other mainstream broad-based indices, the CSI A500 has achieved a good balance in many indicators.

(2) More sub-sector leaders, stronger overall fundamentals

The CSI 300 includes 28 first-level industries and 81 second-level industries of Shenwan, while the CSI A500 covers 30 first-level industries and 109 second-level industries of Shenwan, including more sub-sector leaders while further balancing the industry.

Among them, the proportion of leaders in the new economy field is high, and the proportion of sectors representing new quality productivity (industry, information technology, communication services, medical and health) is nearly 50%, higher than comparable broad-based indices.

According to the mid-year report data of 2024, the return on equity of the CSI A500 constituent stocks is 12.81%, far higher than the 8.51% of the CSI All-Share Index.By industry, the median return on equity (ROE) of the constituents of the CSI A500 index is higher than that of the CSI All-Share Index across various sectors; in emerging industries such as discretionary consumption, healthcare, staple consumption, industry, and communication services, the median revenue growth rate is higher than that of the CSI All-Share Index.

(3) Leading long-term performance

From December 31, 2004 (the base date) to October 8, 2024, the CSI A500 has accumulated a 398.13% increase, outperforming the Shanghai-Shenzhen 300 and the Shanghai Composite Index by 74 percentage points and 224 percentage points, respectively, during the same period.

Overall, it exhibits characteristics of outperforming in bull markets (e.g., significant elasticity in 2019 and 2020) and keeping pace in bear markets.

Performance does not lie, and ultimately, it is the solid foundation of the CSI A500 that speaks volumes.

Implementing a dividend mechanism to pass opportunities to investors outside the market

The prospectus for the Harvest CSI A500 ETF Connect Fund (Class A: 022453, Class C: 022454) clearly states that, subject to meeting the fund's profit distribution conditions, the fund will distribute profits at least once per quarter:

The fund manager will evaluate the fund's excess return over the performance comparison benchmark and the fund's distributable profits on the last trading day of January, April, July, and October each year. The specific distribution time, distribution plan, and the amount of each fund profit distribution will be determined by the fund manager based on actual conditions and announced in accordance with relevant regulations.

Behind the mandatory dividend distribution is the requirement for a stable dividend yield, and the companies included must be financially healthy and have stable development; otherwise, regular dividend distribution would not be possible.For investors, fund dividends offer at least the following benefits:

(1) By receiving cash dividends, investors can get a return of capital without paying redemption fees; the income obtained from fund distributions is temporarily not subject to personal income tax;

(2) While securing a portion of the profits, it also gives investors an additional option— if they are optimistic about the future market, they can reinvest this part of the funds; if the stock market declines later, it can also reduce the risk of significant capital shrinkage;

(3) Dividends can temporarily increase the dividend yield of individual stocks, which may attract additional funds to enter the market, thereby forming a positive feedback loop, which is beneficial for both the stock market and investors.

Clearly communicating to clients that dividends will be paid regularly when conditions are met is also a direction encouraged by policies such as the "Nine National Guidelines."

However, most importantly, compared to industry ETFs, the CSI 500 ETF is more conservative and has a dividend mechanism similar to dividend ETFs, making it very suitable as the first "trial" for equity novices.

The off-exchange linked funds this time provide just such an opportunity.

Some friends in the market even say that sometimes it's better to buy off-exchange linked funds, as they can enjoy the same returns as the index without having to watch the market all the time.

The result is the same, but the happiness is doubled.

"A Series" index full layoutIn recent years, the China Securities Index Series, especially the "A Series" broad-based indices, have been gaining favor with an increasing amount of capital due to their superior index compilation schemes, becoming a new calling card for representing A-shares.

From a market-wide perspective, Harvest is one of only two fund companies that have laid out the China Securities A50ETF, China Securities A100ETF, and China Securities A500ETF simultaneously in the first batch.

In addition to the "A Series," Harvest has also been among the first to lay out broad-based indices such as the CSI 300, China Securities 500, Double Innovation 50, and China Securities 2000.

The ability to continuously and accurately grasp a series of core broad-based indices is a testament to both strategic vision and solid strength.

As early as 2005, Harvest had already begun to lay out index products. Since the establishment of its first ETF—the CSI 300 ETF (now with a scale exceeding 100 billion) in 2012, Harvest has established nearly 50 ETFs in 12 years, with a total management scale that consistently ranks in the top 5 in the industry.

Therefore, ETF investment also emphasizes the brand effect, as index powerhouses with strength and experience are more likely to show significant advantages in liquidity, diverse strategies, cross-market replication capabilities, and ongoing operations.

This is especially true for the more challenging broad-based indices.

Liu Jiayin, the current head of Harvest's Index Investment Department, has been appointed as the fund manager for Harvest China Securities A500ETF (159351) and its linked funds (Class A: 022453, Class C: 022454). She is also the fund manager for Harvest CSI 300 ETF, ensuring her investment capabilities.

So now, everything is ready, and all you need to do is become the "more mature thinker" that Howard speaks of.