Take the Shanghai and Shenzhen 300 Index as an example. It was released in 2005. 15 years later, it has risen from 1000 to nearly 5000. This is not a steady rise, but a ups and downs. For example, in 2008, 20 12 and 20 18 were all in a relatively low position, and reached a peak value close to 5000 after constant fluctuations.
This is mainly determined by the operation mode of the index fund itself.
1. It is determined by the operation mode of the fund.
The basic logic of the fund is to gather the scattered money of the people together, and then the fund manager will invest in his optimistic assets. In this great logic, the core and key point is to "invest money in assets that fund managers are optimistic about". What are the assets that fund managers are optimistic about? Only fund managers know this.
The times are changing with each passing day, and the enterprise that promotes the development of the times is also your company. What assets are good may have different answers every day. In other words, the underlying assets of the fund are constantly changing.
In theory, fund managers will definitely invest in assets with relatively good returns in the market. In the long run, the net value of the fund should be rising. Of course, this is the result of excluding some uncontrollable factors such as market risks that fund managers did not expect.
This has also caused the net value of the fund to rise for a long time and fluctuate constantly.
Second, it is determined by the operation mode of index funds.
Index funds naturally have the nature of funds, and will constantly change in stock selection. Compared with ordinary funds, its only difference is to follow the index. The constituent stocks that determine the index will change with the development of the company. For example, the SSE 50 index is adjusted once every six months, so the index funds that follow the index should also change according to the changes of constituent stocks.
Different fund companies will have different index funds and choose the same stock when picking stocks. Is there no difference? No, the weight of each fund manager's investment in stocks, the time of buying, the position, etc. It may affect the final trend of index funds. The standard to judge whether an index fund is good or bad is to look at their deviation from the corresponding tracking index, and the smaller the better.
Because index funds choose high-quality constituent stocks corresponding to the index, in theory, the index will always rise, and the index fund will always rise. However, due to the different tracking levels of fund managers, there will be times when they can't match the index, and it is normal to have fluctuations.
Summary:
Theoretically, index funds do have a long life, which is consistent with the life of the market and fund management companies. At the same time, because the stocks it chooses are of high quality, which can control the index change and have the mechanism of survival of the fittest, it is relatively good in performance and stock price performance. Therefore, index funds are relatively long-lived and upward-fluctuating investments.