Data indicates that as of October 23, 2024, the total number of ETFs established in the domestic market has reached 1,000. This marks exactly 20 years since the establishment of the first ETF in August 2004. Looking back at the past, the rapid development of domestic ETFs has been concentrated in the recent three years. From 2004 to June 2021, over nearly 17 years, the number of ETFs just broke through 500, and then with policy support and the increasing diversification of indices, the vigorous growth of the entire market's ETFs has become more apparent.

At the end of September and the beginning of October, just passed, the A-share market experienced a rare surge, and ETFs also set many records. On October 8th, the total scale of domestic ETFs once broke through 3.8 trillion yuan, with a single-day net inflow reaching 100 billion, while four years ago in October, the total scale of ETFs just broke through 1 trillion.

Due to their high efficiency, low cost, and the ability to quickly adjust investment portfolios and diversify risks, more and more institutions choose to invest in A-shares through ETFs. As an investment tool that can "select all with one click," it has also become an excellent choice for individual investors.

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Looking at the current trend of A-shares, after the surge and adjustment, it has entered a rational stage to a certain extent, and the valuation is at a historical medium level. There will be opportunities for repair in the medium and long term, and the investment value remains high.

"Blind during the surge, confused during stability, and panicked during the decline" is often a true portrayal of most individual investors. However, the simplicity, efficiency, and comprehensiveness of ETFs can make investments more stable and have also become the "lazy investment method" for market novices.

As the father of index funds, John Bogle, said: Don't look for a needle in a haystack; you should buy the entire haystack. So, what indices and related ETFs have attracted attention recently and have investment value? "Global Finance" has sorted out several aspects for reference.

The trend of the times, science and innovation chips have become the "sharpest spear"

In addition to broad-based ETFs such as the CSI 300 ETF (159919) and the CSI 500 ETF (159922), the first to mention is undoubtedly the science and innovation-themed funds.As the STAR 50 Index rises, in addition to the surge in scale of related ETFs being snapped up, the STAR Chip ETF (588200), which has recorded two consecutive days of a 20cm daily limit up, is also worth paying attention to.

China Merchants Securities refers to the STAR Chip Index as the "sharpest spear" in this round of market trends. It stated that the rapid inflow of ETFs and the large entry of funds outside the market have led to an increase in ETF scale, resulting in fewer actual circulating shares. Some STAR companies have less than 70% of their shares actually circulating. Coupled with the psychology of investors "hoarding shares for appreciation" during the rapid rise phase, the incremental funds entering the sector further enhance the driving effect on stock prices, increasing the elasticity of the rise.

The importance of technology is beyond doubt. Currently, both policy support and development trends point to technological innovation. The country's support for technological innovation policies and strategies continues to intensify. It can be anticipated that the STAR board, as the "pioneer" of technological innovation, will continuously enhance its adaptability and inclusiveness in supporting systems, and through mergers and acquisitions, it can also increase scale effects and stimulate market vitality.

Unlike the SSE STAR 50 Index, which is composed of 50 securities with large market value and good liquidity from the STAR board, the STAR Chip Index focuses on securities related to semiconductor materials and equipment, chip design, chip manufacturing, and chip packaging and testing on the STAR board.

It is precisely because of the more representative constituent stocks involved that the STAR Chip Index has a more hardcore technological attribute, combining valuation, growth, and liquidity advantages. Coupled with the recovery of global semiconductor market sales, the performance of related listed companies is also frequently positive.

Data shows that in August 2024, global semiconductor sales reached $53.12 billion, a significant increase of 20.6% compared to the same period last year, marking the tenth consecutive month of positive growth with a high increase, and the fifth consecutive month of positive growth. Moreover, the single-month sales total in August set a historical high.

Breaking down the data, from January to August 2024, global semiconductor sales grew by 15.2%, 16.3%, 15.2%, 15.8%, 19.3%, 18.30%, 18.70%, and 20.60% year-on-year; Chinese semiconductor sales grew by 26.6%, 28.8%, 27.4%, 23.4%, 24.2%, 21.60%, 19.50%, and 19.20% year-on-year.

Affected by multiple favorable factors, as of October 24, 2024, the STAR Chip Index has risen by 63.09% in the past 20 days, showing greater elasticity compared to the STAR 50 Index.

Among them, the STAR Chip ETF (588200), which tracks the index, has reached a scale of about 28.8 billion yuan. It has been highly sought after by funds in this round of market trends, with the highest single-day transaction volume exceeding 18 billion yuan, and the average daily transaction volume exceeding 2 billion yuan in the past three months.

Thanks to this round of market trends, the STAR Chip ETF has risen by 56.71% in the past six months, ranking in the top 10 of its peers. Even in the downcycle of the semiconductor industry, the STAR Chip ETF has achieved relatively good performance in various phased thematic market trends. For example, it achieved a 7% return in 2023, ranking in the top 10% of its peers; and in the more than two years since its establishment, it has achieved a return of 38.45%, ranking in the top 6% of its peers.It is worth noting that due to its unique nature, the chip sector experiences periodic market trends every year. "Global Finance" has also highlighted opportunities to layout at low points several times during the year, suggesting that anchoring targets and entering at the right time can lead to more effective results with less effort.

Timely, the CSI A500 emerges as a new direction

Some investors may think that even though technological innovation is full of opportunities, high elasticity and high returns also imply high volatility and high risk. They seek a more stable investment direction to further diversify risk. In this case, the recently highly watched broad-based index, the CSI A500, is an option.

The CSI A500 Index was released on September 23, 2024, selecting 500 securities with larger market value and good liquidity from various industries as the index samples to reflect the overall performance of the most representative listed company securities in each industry.

In terms of compilation methods, the CSI A500 Index adopts a "three-level industry full coverage, first-level industry rebalancing" approach, covering all 92 CSI third-level industries, and focusing on the leaders of the third-level industries to ensure a more balanced distribution. At the same time, the proportion of the financial industry is reduced, and the proportion of new economic growth industries is increased.

So, what is the difference between the CSI A500 and the broad-based index representative of the Shanghai and Shenzhen 300 (SSE 300)?

In simple terms, the CSI A500 is approximately equal to the SSE 300 minus traditional industries and adding emerging industries. Compared to the SSE 300, the CSI A500 has a certain over-allocation in growth-style industries, with electric power equipment, pharmaceuticals and biotechnology, and national defense and military industries being significantly over-allocated.

Looking at the major industries, the new drivers such as midstream manufacturing, TMT, and pharmaceuticals and biotechnology in the CSI A500 account for half of the market, with the weight of financial real estate only being 16%. This aligns with the new changes in the industry structure during the high-quality development stage and the new direction of future development, better reflecting the diversification of China's economy and the development trend of new quality productive forces.

Breaking down to the constituent stocks, the CSI A500 includes 266 stocks that are not included in the SSE 300, with a total weight of 20.03%. Among these 266 constituent stocks, large-cap stocks account for 91%, and more than half are concentrated in growth styles, with the rest being mostly cyclical and consumer styles.

While covering a more comprehensive range and focusing on new quality, the CSI A500 also takes into account the blue-chip stocks of the A-share market. The top ten constituent stocks include Kweichow Moutai, CATL, Ping An Insurance, China Merchants Bank, Midea Group, Yangtze Power, Wuliangye, Zijin Mining, Industrial Bank, and BYD, with a combined weight of 21.03%.Due to its comprehensive and excellent compilation plan, the constituent stocks of the CSI A500 Index have shown excellent performance in profitability and growth, with an average revenue growth rate exceeding 10% over three years, and 10% of the companies contributing nearly 70% of the market's profits. They also have high ROE and high FCF characteristics, with profitability and free cash flow both better than the market average, and future investment methods are more inclined to choose quality leaders.

Data shows that as of October 24, 2024, the price-to-earnings ratio (TTM) of the CSI A500 Index is 14.39 times, which is at the 51.96% historical percentile over the past decade, highlighting its medium and long-term allocation value.

As the construction time of the first batch of ETFs tracking the CSI A500 Index coincides with this round of soaring market trends, it naturally attracts high market attention and confidence. Taking the A500 Index ETF (159351) as an example, data shows that in the 8 trading days since its establishment on October 24, the latest share of the A500 Index ETF has increased by 48% compared to its initial establishment, with daily transactions exceeding 500 million yuan.

Following the issuance and establishment of the first batch of exchange-traded funds, on October 25, 10 CSI A500 ETF feeder funds, including Harvest CSI A500 Feeder (Class A: 022453, Class C: 022454), officially went on sale. Off-exchange funds have the advantages of being available through third-party channels, no need to open a securities account, and low threshold for fixed investment.

In addition to the above two directions, most institutions believe that in a low-interest-rate environment, combined with the strong constraints of policies such as the new "Nine National Articles" on enterprises to strengthen shareholder returns, the low-volatility dividend concept that led the market in the early stage still has long-term investment opportunities and can be used as a defensive sector for layout. For example, the dividend low-volatility ETF fund (515300) is worth paying attention to.