The A-share market has been climbing consecutively in recent days, with market sentiment continuing to heat up. The Shanghai Composite Index hit a new ten-year high, A-share total market capitalization broke through 100 trillion yuan, and positive news keeps coming one after another.

Market voices about a "bull market" are becoming increasingly prevalent, yet different investors are experiencing varying degrees of gains. Many people report that despite the strong market performance, they feel they haven't made money or even failed to outperform the index, joking that they are "dodging the bull market."

Is beating the index really that difficult? Our statistics show that among over 2,000 equity-oriented hybrid funds in the market since 2018, only 4 funds have outperformed the CSI A500 Index every single year.

Wall Street also has its famous "ten-year bet," where Buffett made a million-dollar wager in 2005, betting that over a ten-year period, actively managed fund portfolios could not outperform index funds. Ten years later, Buffett won that bet.

Why is it so hard to consistently beat the index?

First, market sector rotation has accelerated in recent years, with increased volatility. At this time, if you happen to buy into leading sectors, the experience might be acceptable, but if you miss the rhythm or choose the wrong sectors and individual stocks, the experience could be quite poor.

Second, broad-based indices are continuously upgrading. Mainstream broad-based indices represented by the CSI A500 have industry structures that are becoming more balanced. The proportion of traditional industries like finance and real estate continues to decline, while the weight of emerging industries correspondingly increases, making them more growth-oriented. Combined with index dividends, the overall returns of broad-based indices are getting better, significantly improving their investability.

Additionally, retail investor behavioral biases and subjective factors also affect returns. Issues like inverted pyramid position building, following trends, chasing highs and selling lows are common problems among many investors, leading to high portfolio volatility, increased transaction costs, and subsequent erosion of returns.

Anchoring to Broad-Based Indices, Following Market Trends

Under such circumstances, if investors want to capture market trends while worrying about uncertainties brought by sector rotation, the allocation value of broad-based indices becomes prominent. The advantages of broad-based indices can be summarized in three words:

Diversification: Broad-based indices contain a basket of quality stocks from different industries, effectively providing risk diversification and avoiding impacts on returns from single industry or individual stock volatility.

Balance: Broad-based indices typically include stocks of different market capitalizations and styles. Taking the CSI A500 as an example, it achieves full coverage of CSI secondary industries and basic coverage of tertiary industries, encompassing both traditional and emerging sectors, growth and value styles alike.

Stability: Precisely due to their balanced and diversified characteristics, broad-based indices have stronger adaptability compared to individual stocks. For instance, the CSI A500 performed better during growth-style dominance in 2021 and 2022, while not significantly underperforming during value-style dominance in 2017 and 2018.

CSI 300 Index vs CSI A500 Index

How should one choose among broad-based indices? Currently, the two most mainstream broad-based indices are the traditional CSI 300 and the new-generation large-cap broad-based CSI A500 Index.

From an industry distribution perspective: The CSI 300 has a higher proportion of traditional industries, with banking and non-banking financial services being the two highest-weighted sectors. However, the CSI A500, building on the CSI 300's foundation, reduces weight by approximately 12.51% in non-banking financial + banking + food & beverage sectors, while incorporating more leaders from emerging fields like electrical equipment, pharmaceuticals & biotechnology, electronics, and computers. Its sector weight distribution is more consistent with A-shares overall, providing stronger representativeness.

By incorporating more emerging industries, the CSI A500 Index demonstrates stronger growth characteristics, delivering solid performance in this year's growth-style-dominated market.

Wind data shows that as of August 18, the CSI A500 Index gained 9.32% year-to-date, while the CSI 300 gained 7.74% over the same period, showing clear outperformance.

This means that even with banks performing strongly in the first half of this year, the CSI A500 still outperformed the CSI 300 Index despite being underweight in financial sectors by nearly 10%.

From a long-term return perspective: The CSI A500 Index also holds advantages. As of June 30, 2025, the CSI A500 Index has gained 363.05% since its base date, while the CSI 300 and CSI 800 indices returned 293.61% and 326.30% respectively over the same period.

CSI A500 ETF (159338): Closely Tracking the CSI A500 Index

As of August 18, the CSI A500 ETF (159338) had assets under management of 18.182 billion yuan, ranking among the market leaders. The CSI A500 ETF closely tracks the CSI A500 Index, embodying the balanced, comprehensive, "blue-chip collection," and emerging industry-focused characteristics mentioned above.

The CSI A500 ETF also offers competitive fee advantages, with management and custody fees totaling only 0.2%. As a tool-type product, the fees are sufficiently attractive, making it more suitable for long-term core allocation.

Furthermore, from a capital flow perspective, according to the CSI A500 ETF (159338) 2024 annual report, long-term capital like insurance funds views the CSI A500 as core allocation. Among the top ten holders, many insurance institutions hold substantial positions in the CSI A500 ETF (159338), with the highest holding exceeding 1.8 billion yuan.

Data source: Fund 2024 annual report

Facing rapidly rising market conditions, for ordinary investors, allocating to the CSI A500 ETF (159338) helps follow market trends while avoiding the risk of missing opportunities through individual stock and sector selection. Moreover, institutions' genuine capital investment also indicates optimism about the CSI A500's future performance. Off-exchange investors can also consider the CSI A500 ETF's feeder funds (Class A: 022448, Class C: 022449, Class I: 022610).

Risk Disclosure Data source: Wind. Views are for reference only and will change with market conditions, and do not constitute investment advice. China's stock market was established relatively recently, and historical performance does not represent performance guarantees. The CSI A500 ETF is an equity fund, with expected returns and risk levels theoretically higher than hybrid funds, bond funds, and money market funds. This fund is an index fund that primarily adopts a full replication strategy, tracking the CSI A500 Index, with risk-return characteristics similar to those of the market portfolio represented by the underlying index. Before making investment decisions, investors should carefully read the fund's prospectus and fund contract, fully consider their own risk tolerance, and invest prudently. Fund investment involves risks, please invest carefully. Past index performance does not constitute promises or guarantees regarding fund performance.