Core Viewpoint - The article emphasizes the potential of smart beta index funds, which utilize more sophisticated stock selection rules compared to traditional index funds, to achieve long-term excess returns in the market [3][4][11]. Group 1: Smart Beta Index Funds - Smart beta index funds represent a small portion of the market, with only 1.7 trillion yuan, accounting for approximately 0.5% of the total public fund size of 32.24 trillion yuan in China by the end of 2024 [2]. - These funds employ stock selection based on proven financial metrics or price characteristics, rather than just market capitalization [4][5]. - Common factors used in smart beta strategies include dividend yield, quality, value, low volatility, and momentum [15]. Group 2: Performance of Smart Beta Strategies - Historical data from 1927 to 2023 indicates that smart beta strategies can outperform the market, with various factors showing significant annualized returns above the overall market return of 9.5% [17][18]. - The long-term performance of factor-based strategies demonstrates that almost all factor long portfolios yield returns significantly higher than the market index, suggesting that holding a good smart beta fund is likely to provide better returns than traditional indices like the CSI 300 [20][23]. Group 3: Challenges and Considerations - Despite the effectiveness of smart beta strategies, they can experience prolonged periods of underperformance, which may lead to investor skepticism [24][26]. - Historical data shows that some factors can have long periods of underperformance, with the longest being four years for several factors [28][29]. - Diversifying across multiple factors can help mitigate risks associated with individual factor underperformance, as different factors may perform well at different times [30]. Group 4: Insights from Historical Data - Long-term data supports the reliability of smart beta index funds, indicating that missing out on these investment opportunities could be regrettable [32]. - Investors are advised to construct multi-factor portfolios to balance risk and return, incorporating defensive and aggressive strategies [35]. - A long-term investment horizon is essential for realizing the excess returns from smart beta strategies, as they may require enduring periods of underperformance [37][39]. - Risk management is crucial, as smart beta funds are still subject to market fluctuations and can decline during bear markets [40][41].

Core Viewpoint - The company aims to develop a differentiated path for its index business, focusing on enhancing investor experience and leveraging the overall strategy of the parent bank [1][4]. Group 1: Index Fund Market Overview - The public fund industry has entered a new era of index investment, with index funds becoming essential tools for both individual and institutional investors due to their high liquidity, low fees, and transparent strategies [2]. - As of May 21, the scale of ETFs has surpassed 4 trillion yuan, with over 120 new ETFs established this year [2]. - The industry is experiencing a "Matthew effect," where new product issuance increasingly relies on the comprehensive strength, experience, and collaboration of fund companies, posing significant competitive pressure for latecomers like the company [2]. Group 2: Development Strategy - The company emphasizes a steady and methodical approach to development, progressing from broad-based to strategic and then to thematic industry products [3]. - The current goal is to complete the product chain of index funds before gradually diversifying the product categories [3]. Group 3: Enhancing Investor Experience - The company prioritizes improving investor experience as a core aspect of its development, aiming to create a professional and inclusive index business system [4]. - There is a paradigm shift in index fund development from prioritizing trading attributes to focusing on holding experience, with a need for predictable returns and controlled volatility [4]. - The company plans to prioritize products with lower drawdowns and volatility, ensuring strong explanatory logic for investment strategies [4]. Group 4: New Growth Points in Index Business - In the competitive index market, Smart Beta strategies and index-enhanced funds are emerging as new growth points [5]. - Compared to pure index products, index-enhanced products have advantageous fee structures and can potentially increase returns while meeting client and channel needs [5]. - The company recognizes the challenges in promoting Smart Beta strategies due to the need for financial knowledge and the lack of standardized definitions within the industry [6]. Group 5: Future Product Diversification - The company sees potential for further diversification of Smart Beta products, with core strategies including growth, dividends, quality, and value, which can be further segmented [6]. - These foundational strategies exhibit more regular cyclical patterns in market conditions, providing new development opportunities for index products [6].

Group 1: ETF Industry News - Multiple defense and military sector ETFs have risen, with institutions optimistic about a potential upward trend in the military industry [1] - The high-end equipment ETF (159638.SZ) increased by 1.43%, military leader ETF (512710.SH) rose by 1.31%, and defense ETF (512670.SH) went up by 1.27% [1] - Shenwan Hongyuan Securities suggests that the short-term pullback may be ending, and the military industry is expected to stabilize and continue its upward trend due to stable orders and ongoing military trade [1] Group 2: Market Performance Overview - The three major indices showed mixed results, with the Shanghai Composite Index unchanged at 3367.58 points, the Shenzhen Component Index down by 0.08%, and the ChiNext Index down by 0.33% [3] - The North Stock 50, CSI 1000, and CSI 500 indices performed well, with daily increases of 2.37%, 0.45%, and 0.09% respectively [3] Group 3: ETF Market Performance - The average daily performance of commodity ETFs was the best among various categories, with an average increase of 0.45%, while stock style index ETFs had the worst performance with an average decrease of 0.04% [7] - The top three performing stock ETFs today were the 1000 Enhanced ETF (561780.SH) with a gain of 1.81%, the Real Estate ETF (512200.SH) with a gain of 1.62%, and the Real Estate ETF Fund (515060.SH) with a gain of 1.56% [10][11] Group 4: ETF Trading Volume - The top three stock ETFs by trading volume were the A500 ETF Fund (512050.SH) with a trading volume of 3.133 billion, the Sci-Tech 50 ETF (588000.SH) with 2.358 billion, and the A500 Index ETF (159351.SZ) with 2.294 billion [13][14]