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Another core broad-based index is here!

On August 27, 2024, China Securities Index Co., Ltd. announced the release arrangement of the CSI A500 Index. The index will be officially released on September 23, 2024. It is reported that the index adopts an industry balanced sampling method, and will select 500 securities with large market capitalization and good liquidity from various industries as index samples. As of July 2024, the total market capitalization of the index samples will be about 40 trillion yuan, and more leading companies in emerging fields will be included.

According to a reporter from Securities China, many fund companies are currently actively reporting related ETF fund products that track the index, and industry insiders have exclaimed that "it's rolling up again."

CSI A500 Index to be released next month

On August 27, 2024, China Securities Index Co., Ltd. announced the release schedule of the CSI A500 Index. The index will be officially released on September 23, 2024.

China Securities Index Co., Ltd. said that in recent years, my country's high-quality economic development has continued to deepen, the transformation of new and old drivers has accelerated, and the industrial structure has been further optimized, which has promoted the continuous increase in the proportion of new quality productivity-related industries in the capital market. In order to reflect the overall performance of representative companies in various industries from multiple dimensions and provide the market with diversified performance benchmarks and investment targets, the index company has researched and launched the CSI A500 Index.

The CSI A500 Index adopts an industry-balanced sampling method, selecting 500 securities with large market capitalization from various industries as index samples, and keeping the market capitalization distribution of the index sample industry and the sample space as consistent as possible, reflecting the overall performance of the most representative listed securities in each industry. At the same time, the index compilation combines screening conditions such as interconnection and ESG to facilitate the allocation of A-share assets by domestic and foreign medium- and long-term funds.

The CSI A500 Index samples take into account both market value representativeness and industry balance. As of July 2024, the total market value of the index samples is about 40 trillion yuan, and the median market value is about 32 billion yuan. The industry distribution of the index is relatively balanced, and more emerging field leaders are included. The total weight of the industrial, information technology, communication services, and medical and health industries is about 50%, which is higher than the comparable broad-based index. The latest sample covers all 35 CSI secondary industries and 92 tertiary industries. The fundamentals of the sample companies are good, and 70% of the samples are ranked in the top 30% of the same industry in terms of return on net assets or revenue growth in the past year.

Focusing on broad-based layout, integrating industry balance and high-quality leading companies

Regarding the difference between the CSI A500 and the already launched CSI 500 Index, an industry insider introduced that the two are different in compilation. The CSI 500 Index selects 500 stocks outside the CSI 300 Index, while the CSI A500 Index selects the top 500 stocks in terms of market capitalization. The constituent stocks here may overlap with those of the CSI 300 Index.

Wind data shows that there are currently 26 CSI 500 ETFs in the market, with a total scale of over 110 billion yuan as of August 27. Among them, the scale of Southern CSI 500 ETF reached 83.382 billion yuan, and the scale of Huaxia CSI 500 ETF and Harvest CSI 500 ETF both exceeded 10 billion yuan.

In addition, as one of the CSI A series indices, the compilation method of the CSI A500 Index may be in line with that of the CSI A50 Index. "Take the CSI A50 Index as an example. The index sample industry distribution of this index is relatively balanced, covering a total of 30 CSI secondary industries and 50 CSI tertiary industries, and maintaining at least one selected for each secondary industry. At the same time, it introduces ESG sustainable investment concepts, interconnection screening and other elements to facilitate domestic and foreign medium- and long-term funds to allocate core A-share assets. These compilation ideas may also be reflected in the CSI A500 Index." Another industry insider said.

Regarding the CSI A500 Index, Morgan Asset Management said that the CSI A500 Index closely follows the relevant requirements of the new "Nine National Regulations" to promote the development of indexed investment, enriches the selection of broad-based indexes, and selects 500 constituent stocks with the largest market capitalization in each industry as index samples. Compared with other mainstream indexes that focus on investing in industry leaders, the CSI A500 Index focuses on investment opportunities in the high-quality development stage of China's economy, widely covers companies with growth potential, and is expected to bring new vitality and investment options to the capital market. The CSI A500 Index takes a broad-based layout as the main line, integrates industry balance and high-quality leading companies, and demonstrates the future potential of the Chinese economy. It is opening a new chapter in the development of ETFs and a new perspective for investing in China.

Several fund companies are actively preparing

It is reported that in April this year, when there were rumors in the market that CSI Index Co., Ltd. might be planning to launch another broad-based index in the CSI A series - the CSI A500 Index, a number of fund companies were keeping a close eye on the progress of the index. Currently, a number of fund companies have expressed their willingness to report fund products such as ETFs that track the index.

"Compared with the CSI 500 Index, the CSI A500 Index has a lower weight in the financial and real estate industries and pays more attention to industry balance." A person from a fund company said that the company attaches great importance to the index and is currently actively preparing materials to apply for authorization.

In addition, broad-based ETFs have become the main force of "attracting money" in the past year, and various fund companies are competing to make arrangements. The success of the broad-based CSI A50 ETF launched earlier has made many fund companies that have not participated in the layout have high expectations for the CSI A500 ETF. Compared with the CSI A50 Index, the CSI A500 Index has more stocks, a wider coverage, and the product capacity may be larger in the future. However, whether it can be approved in the end depends on regulatory approval.

Referring to the scale of A50ETF, as of August 27, the total scale of the 10 CSI A50ETFs established for more than four months exceeded 30 billion yuan. Among them, Ping An CSI A50ETF, Morgan CSI A50ETF and Yinhua CSI A50ETF ranked first, with scales of 5.09 billion yuan, 4.198 billion yuan and 4.166 billion yuan respectively.