Category: Money tips Release Date: 2007-04-06
Investment in the arts is gradually transformed to invest in science. In the past ten years, as modern portfolio theory (Modern Portfolio Theory, MPT), the capital asset pricing model (Capital Asset Pricing Model, CAPM), the efficient market hypothesis (Efficient Market Theory, EMT) the prevalence and development of the traditional active type (or active type) portfolio strategy has been a great challenge. At the same time, the theory of efficient market-based index of investment represented by the passive (or passive) investment portfolio strategy gradually developed.
In general, index-based investments in two ways: one is an indirect way, that is, through the purchase of index funds, index futures, index options, exchange-traded funds (ETF), index of connectivity bills and certificates (Index-linked Notes and GICs ) and other financial derivatives to obtain the benchmark index of the target rate of return; another kind of direct way, through direct purchase of securities covered by the benchmark index to track the replication index portfolio, access to a particular market benchmark return.
Index-based investments from the market as early as the validity of the theory. Index-based investing is based on access to a particular market benchmark rate of return for the purpose of investment strategy, namely through direct replication target index, the portfolio or through a variety of indicators of innovation and the combination of derivatives to get in line with the benchmark index of the market rate of return. If the benchmark index by direct replication portfolio approach to investing can save some of the indexation of financial derivative products, the middle agent fees, the underlying index of choices will be more general, but there are two problems: First, if all the replication benchmark Index portfolio of funds for investors, the amount of certain requirements; second is if the holders of the most representative benchmark index of securities to complete the track replication index, although they could reduce the amount of capital requirements, but how to select securities representatives became a theoretical and empirical problems. Therefore, direct style index of investment and indirect investment in index-based co-exist in the area of investment, to optimize the configuration of a reasonable indexation of investment portfolio in order to minimize the tracking error existing hot issues.
Index Investing is positive (active type) corresponding to the passive investment strategy type (passive) investment strategy important way. An active investing strategy (Active Strategies) is through active security selection or market timing to beat the market strategy: namely the use of fundamental analysis in selecting assets work hard to find prices deviate from the value of assets, and options trading using technical analysis timing. According to the efficient market theory, a perfectly efficient market, stock prices reflect what is known about all the information about the stock, any source of information and processing methods can not be a steady increase in earnings, any professional investors, the market value of zero marginal Therefore, attempts to beat the market in an efficient market is impossible to achieve systematic success, unless it is luck. This means that the best investors in the investment strategy is to invest in the "market" portfolio, which provides the highest level unit of risk return, the usual practice is to simulate some kind of major market indices to invest in such a passive investment strategy ( Passive Strategies) does not try to beat the market, but only to obtain the level of the average market rate of return. Therefore, (1) From the perspective of portfolio management, index-based investment represents a significant investment in management strategies - passive type (passive) investment portfolio strategy; (2) from the investment decision-making point of view, the index-based investment representative a robust stock selection mechanism, that is, in a particular market through asset allocation and security selection of these two investment decision-making process of selecting the optimal portfolio to secure consistent with the market index rate of return, rather than a positive-type investment strategy as the pursuit of more than the market index rate of return.
With the index of the growth of investment, the new index-based investment derivatives, such as index funds, index futures, index options, exchange traded funds (Exchange Traded Fund, ETF) and so continue to emerge, enriching the depth and breadth of Index Investing for More investors are looking for variety, easy to operate choice. "Promote the capital market reform and stable development" has become China's capital market development in the basic strategy of 10 years of China's capital market development in a proven track record, but still there are many problems, such as inefficient capital markets, equity structure is irrational, the financial the lack of such derivative products, resulting in China's capital markets more volatile and risky market investment, therefore, vigorously promote investment in index-based index of investing in derivative products rich in promoting the stable development of China's capital market has important theoretical and practical significance.
The number of Jilin University, Center for Economic Research Dr. Gao Dawei
