ETFs become the "sharpest spear" in a bull market.

On October 8, the first trading day after the National Day, A-shares continued to rise sharply. Wind data shows that as of the close, the Shanghai Composite Index rose more than 4%, and the turnover of the two cities exceeded 3.4 trillion yuan, hitting a record high. Behind the rise of A-shares, ETFs have also reappeared in batches, and funds have entered the market by running.

In the secondary market, as many as 400 ETFs closed up more than 10% on the same day, and 76 ETFs rose 20%. At the same time, a number of broad-based index ETFs also set a new record for trading, including the ChiNext 50 ETF (159949), a total of 7 stock ETFs with a full-day turnover of more than 10 billion yuan. According to Morningstar statistics, in the week before the National Day, the total net inflow of United States stock ETFs investing in A-shares and Hong Kong stocks reached US$5.148 billion.

The new economic e-line has noticed that in recent years, the domestic ETF market has ushered in leapfrog development. Wind statistics show that as of September 30, 2024, the number of non-stock ETF funds has grown from less than 100 at the end of 2014 to 970 now, and the number of non-stock ETFs has increased rapidly by 8.8 times, and the total scale of non-stock ETF funds has grown from more than 20 million yuan at the end of 2014 to 3.35 trillion yuan now, and the scale of non-stock ETFs has increased by 14.58 times, making it one of the investment varieties with the fastest expansion rate.

In this regard, some market participants believe that from the comprehensive perspective of performance, return and risk control, ETF index funds have both a "sharp spear" and a "solid shield". In terms of performance, ETF index funds can outperform the investment returns of individual stocks, and in the trend market, the sharp "spear" of the ETF can be used to capture the β market when the index rises; In terms of risk control, ETF index funds have lower annualized volatility and smaller maximum drawdowns, so investors can use the solid "shield" of ETFs to avoid chasing ups and downs in a volatile market, get a good investment experience, and enhance holding confidence.

Nowadays, with the intensive release of blockbuster policies, the A-share market is worth looking forward to, how investors can use ETF investment tools to quickly seize the index market and grasp the industry opportunities, let's find the answer together.

First, the market grows broadly

According to the new economic e-line, since September 24, after the "combination of financial policies" took effect, the market sentiment has warmed strongly, the A-share market has exploded across the board, the inflow of funds has accelerated, and investor confidence has further recovered. In the index market, the large-market growth broad-based represented by the ChiNext 50 ETF (159949) and the Science and Technology Innovation 50 ETF Index Fund (588280) focuses on the core assets of "big and beautiful" growth, which is expected to continue to benefit from the release of policy dividends and help capture the β market of the index. At the same time, given that it has a 20% price limit, this type of ETF is also the most flexible investment target.

Source: Wind (as of October 8, 2024).

Wind data shows that as of October 8, the ChiNext 50 index has risen by more than 70% in just five trading days, ranking at the top of the list of major broad-based indexes. On October 8, the Shanghai Composite Index and the Shenzhen Component Index all showed wide intraday fluctuations, while the ChiNext 50 Index performed more strongly.

On the same day, although the ChiNext 50 index fell sharply by more than 10% intraday, it climbed again in late trading and closed at the second highest point of the day at 2557.64 points, up 18.56%. It can be seen that the ChiNext 50 index is more favored by funds. From the perspective of turnover, the daily turnover of ChiNext 50 ETF (159949) was 14.187 billion yuan, an increase of 9.964 billion yuan from the previous trading day, and a month-on-month increase of 235.90%.

The new economy e-line learned that behind the main broad-based index led by the ChiNext 50 index, the index brings together the growth white horses in the advantageous areas of the ChiNext board. At the same time, as a representative of new quality productivity, the ChiNext 50 Index focuses on enterprises that are in line with the concept of "three innovations and four innovations", that is, those companies that have the ability to innovate, create and create, and have made breakthroughs in new technologies, new industries, new formats and new models. These enterprises represent the new qualitative productive forces in China's new round of economic structural transformation.

The GEM 50 Index selects companies that are in a leading position in their respective industries, and such leading enterprises have obvious advantages in R&D investment and technology transformation, while showing strong profitability and market adaptability, which is an important part of the core assets of GEM. Therefore, when the market risk appetite has improved significantly, the investment elasticity of the GEM 50 EFT (159949) has also been fully demonstrated.

On October 8, the STAR Market series of indices also continued to strengthen, and the related ETFs tracking the SSE STAR Market 50 Component Index also hit the 20% limit. For example, Huaan Fund's Science and Technology Innovation 50 ETF Index Fund (588280) continued to rise and attracted much attention from funds. In terms of month-on-month increase in transaction value, only the single-day trading volume of the Science and Technology Innovation 50 ETF index fund increased by more than three times month-on-month.

Source: Wind (as of October 8, 2024).

Some market participants believe that institutional funds will cover the positions of high-quality core assets that have fallen before, and the recovery of market risk appetite will help the valuation repair of growth sectors, and some stocks in the technology industry may have bottom-up opportunities. At present, the relatively hot policy theme of new quality productivity in the early stage is still continuing to exert force, and the main direction is scientific and technological growth, and the medium-term advantages of scientific and technological growth are obvious. The STAR Market may usher in structural optimization in the subsequent market shocks and become a new market focus.

2. Hard-core technology theme ETFs

The new economy e-line learned that among the high-elasticity theme ETFs, as a representative of the hard-core technology of the science and technology innovation board, the chip ETF focuses on the high-tech links of the chip industry, with the characteristics of "small and beautiful", strong scientific and technological innovation attributes, and is a high-quality tool for investing in leading companies in the domestic chip industry chain, and the current allocation value is outstanding.

In the secondary market, Huaan Science and Technology Innovation Chip ETF Fund (588290) has continued to be active recently, attracting the attention of funds. On October 8, Huaan Science and Technology Innovation Chip ETF Fund closed with a daily limit. This is also the second consecutive trading day that the ETF has risen 20%.

The STAR Market ETF Fund (588290) closely tracks the SSE STAR Market Chip Index, which selects securities related to semiconductor materials and equipment, chip design, chip manufacturing, chip packaging and testing from companies listed on the STAR Market as the index sample to reflect the overall performance of the securities of listed companies in the chip industry representative of the STAR Market. Compared with other A-share chip-themed indexes, the SSE Science and Technology Innovation Board Chip Index focuses on the chip leaders of the Science and Technology Innovation Board, with a relatively high weight in high-tech links such as design and manufacturing, and strong scientific and technological innovation attributes. The Science and Technology Innovation Chip Index is one of the first industry indices of the Science and Technology Innovation Board, and it is an important index to characterize the market of the Science and Technology Innovation Board.

As of September 30, 2024, the top 10 weighted stocks in the SSE STAR Market Chip Index are Haiguang Information (688041), SMIC (688981), AMEC (688012), Montage Technology (688008), Cambrian (688256), Shanghai Silicon Industry (688126), China Resources Micro (688396), Jingchen (688099), Huahai Qingke (688120), and Tuojing Technology (688072). The top 10 weighted stocks together accounted for 60.54%.

Some market participants believe that with the expansion of domestic wafer factories, domestic computing power chips, memory chips and equipment materials have ushered in a new window period for domestic substitution. At present, the rapid iteration of large models has accelerated the iteration of computing power chips, expanded the production capacity of advanced processes and advanced packaging, and the development of artificial intelligence has pushed the chip industry into a new growth period. The investment of the third phase of the big fund has injected long-term funds into the domestic chip industry, and the localization rate of core semiconductor equipment and chip frontier fields is expected to increase. The continuous introduction of supportive policies will inject strong impetus into the industry and promote the field of information innovation to gradually enter the order landing period. At the same time, the breakthrough and accelerated application of core technologies such as artificial intelligence, big data, and cloud computing are expected to promote the industry into a long-term growth track.

According to SEMI data, global semiconductor sales reached $53.1 billion in August 2024, up 20.6% year-on-year and 3.5% month-on-month, monthly sales increased for the fifth consecutive month, with sales in the Americas up 43.9% year-on-year and China sales up 19.2% year-on-year. According to the research report of Guojin Securities, semiconductors are actively picking up, the industrial chain is actively benefiting, and the industry is expected to usher in multiple drivers of cycle recovery, performance boost and valuation repair. Debang Securities believes that the current semiconductor sector may have come to the bottom of the cycle and stand at the starting point of a new cycle. At present, the revenue and performance of semiconductor-related companies are gradually recovering, releasing a signal of cycle reversal.

Third, the large market blue chip broad base

The

new economy e-line has noted that in recent years, investors have become more and more stringent in their requirements for high-quality, stable earnings, continuous dividends and reasonable valuation of equity assets, and the CSI 300 Index has shown its unique adaptability in all aspects. Overall, the constituent stocks of the CSI 300 Index have the characteristics of "high quality, large market capitalization, high competitive barriers, and reasonable industry distribution", and are large-cap blue-chip broad-based indices that investors should pay attention to in the medium and long term.

Source: Wind (as of October 8, 2024).

Wind statistics show that as of the close of trading on October 8, the total turnover of CSI 300 Index ETF throughout the day was 58.468 billion yuan, an increase of 15.753 billion yuan from the previous trading day, an increase of 36.88% from the previous trading day. Among them, the CSI 300 ETF index fund (515390) traded more than 300 million yuan throughout the day, an increase of 63.99% month-on-month. In terms of secondary market performance, the CSI 300 Index rose 5.93% in a single day, and the related ETFs tracking the CSI 300 Index rose by 6.82% on average. Among them, the CSI 300 ETF Enhanced Fund (561000) under Huaan Fund was the top gainer, rising 10.04% throughout the day.

As of October 8, the CSI 300 Index has risen 24.04% this year, ranking 13th among more than 40 core indices in the Shanghai and Shenzhen markets. At present, the CSI 300 Index has a relatively balanced distribution of industry and market capitalization, with small volatility and stable earnings of constituent stocks, with a high overall dividend rate and a relatively low valuation. Due to its rich constituent stock structure and reasonable distribution of style, industry and market capitalization, the CSI 300 Index continues to maintain its advantage in the dynamic changes of the market. In fact, in recent years, the CSI 300 Index and its enhanced investment products have gradually become an attractive allocation option in the field of equity investment due to their many advantages.

According to the new economy e-line, the CSI 300 constituent stocks, known as the "core assets" of the market, represent leading enterprises in various industries, with excellent stability, strong profitability and abundant cash flow. At present, the constituent stocks of the CSI 300 span 28 Shenwan first-tier industries, including not only the traditional financial industry, but also the weight of consumption, high-end manufacturing, technology and other fields has also increased significantly. This diversified allocation of CSI 300 enables it not only to maintain a stable foundation, but also to capture the growth dividends of emerging industries, showing stronger growth potential and anti-risk ability. These companies tend to be leaders in their respective industries and are able to maintain high risk resilience and stable performance in the face of market volatility. At the same time, the CSI 300 constituent stocks also have significant advantages in terms of asset quality and financial health, providing investors with assets that can be invested in for the long term.

In contrast, the growth rate of the constituent stocks of the CSI 500 and other indices varies greatly, with a wide range of positive and negative growth rates, and some targets have higher growth and profit elasticity in the market upward stage, which can bring higher investment returns. However, this growth characteristic is not uniform across the overall constituents, resulting in a large fluctuation in the earnings growth performance of the index as a whole. Therefore, the CSI 300 Index has obvious advantages in terms of growth stability, which is suitable for investors who want to avoid the risk of volatility.

Similarly, the CSI 300 Index Enhanced Product has also demonstrated solid historical returns. Looking back at the performance over the past decade, the median alpha of the CSI 300 Index Enhanced has remained positive for most years, regardless of market volatility or risk movements. This is mainly due to the strictness of risk control and the refined management of industry allocation, constituent stock selection and investment style. Their alpha returns are mainly derived from the alpha returns generated by stock selection strategies, which to a certain extent avoid return fluctuations caused by sector or style preferences. As a result, the vast majority of these products can achieve consistent positive alpha over long-term investments.

Taking the CSI 300 ETF Enhanced Fund (561000) as an example, the fund has excellent performance and obvious excess returns, providing investors with a choice that takes into account both growth and risk control.

It is worth mentioning that in the context of incremental funds running into the market, due to the difficulty of stock selection and the limited capacity of individual stock funds, index products represented by ETFs have become a priority, and the market is currently bursting out with a rainbow index market. However, when investors choose ETFs, they should not only consider the fundamental logic, but also pay attention to the timing issue, pay attention to the drawdown during the adjustment, and the strength of the funds to buy when adjusting, etc., and it is recommended to invest with a balanced allocation idea.

Risk Warning: Views are for reference only and do not represent investment advice. The market is risky, and investors need to be cautious. Past performance is not indicative of future performance. Before purchasing a fund, investors should carefully read the fund's "Fund Contract", "Prospectus" and other legal documents to understand the risk-return characteristics of the fund, and judge whether the fund is suitable for the investor's risk tolerance according to their own investment objectives, investment period, investment experience, asset status, etc. The MACD golden cross signal is formed, and these stocks are rising well!