Low-Fee, Dividend-Eligible: Fuguo Zhongzheng A500 ETF Launches with a Bang

As a series of policy combinations are introduced, market expectations and confidence have been significantly boosted, drawing high attention from domestic and international investors to the A-share market. With China's economy accelerating towards a high-quality development phase, core assets have demonstrated the resilience of the strong, and the allocation value of the new generation of core broad-based indices, represented by the CSI A500 Index, has become more prominent. Recently, the much-anticipated Fuguo CSI A500 ETF Initiated Linked Fund (Class A: 022463, Class C: 022464) is being issued.

Lower fees + quarterly dividends make the linked fund quite attractive. It is understood that the Fuguo CSI A500 ETF Initiated Linked Fund achieves a close tracking of the CSI A500 Index by investing in the Fuguo CSI A500 ETF, demonstrating a balanced industry allocation and integrating the stability of large-cap companies with the vitality of new economy attributes, creating a convenient channel for investors to share in the dividends of China's high-quality economic development.

Laying out the CSI A500, the first choice is the linked fund configuration. On the one hand, the fees are lower; the management fee rate of the Fuguo CSI A500 ETF Initiated Linked Fund is 0.15% per year, and the custody fee rate is 0.05% per year. The combined "management fee rate + custody fee rate" is 0.20% per year, which is the lowest in the same category of funds. The low fee rate advantage helps investors to invest in China's 500 core assets at a low cost and low threshold. At the same time, the fund's Class A shares are exempt from sales service fees, and Class C shares are exempt from subscription fees, allowing investors to flexibly allocate according to their personal investment needs. On the other hand, dividends are paid quarterly. The Fuguo CSI A500 ETF Initiated Linked Fund adopts a quarterly dividend evaluation mechanism, and dividends can be arranged when the fund's profit distribution conditions are met, striving to provide investors with a higher quality investment experience.

Constituent stocks focus on "core assets" + "new quality productivity". As an upgraded version of the core broad-based index, the compilation concept of the CSI A500 Index follows the international pace, especially benchmarking the US stock "S&P 500" index. In terms of compilation rules, on the basis of traditional broad-based indices using market value and trading volume as the main screening indicators, the CSI A500 Index has included considerations such as ESG evaluation, industry neutrality, and large-cap style, carefully selecting 500 representative companies in the sub-industries. These companies not only demonstrate the stable strength of large-cap companies but also show a forward-looking vision in the layout of "new quality productivity", which is highly consistent with the direction of national development strategies.

Among them, ESG rating is one of the important indicators to measure the non-financial profitability and sustainable development ability of listed companies, reflecting the long-term return risk characteristics of enterprises. Wind data shows that as of October 18, 2024, among the constituent stocks of the CSI A500 Index, the proportion of stocks with an ESG rating of A is 53%, which is higher than the CSI 500 Index and comparable to the CSI 300 Index. By conducting negative screening of ESG ratings and excluding listed companies with poor governance and potential risk of explosion, the investability of the CSI A500 Index is further enhanced.

At the same time, the CSI A500 Index pays more attention to industry neutrality in its compilation and prioritizes the inclusion of leaders in various sub-industries. The index selects 500 securities with larger market value and better liquidity from various industries as index samples, widely covering all 35 CSI second-level industries and 92 third-level industries.

At the same time, data shows that as of October 18, 2024, compared with the CSI 300 Index, the CSI A500 Index focuses more on the allocation of manufacturing and technology growth industries such as non-ferrous metals, national defense military, basic chemical industry, automobiles, TMT, and pharmaceutical biology, while the coverage of traditional industries such as non-bank finance, banking, food and beverages, and agriculture, forestry, animal husbandry, and fisheries is relatively lower, which is more in line with the direction of "new quality productivity". Due to the industry-neutral processing, the industry distribution of the CSI A500 is closer to the CSI Total Index, thus better representing the overall performance of the A-share market, with a smaller deviation in industry exposure. At the same time, industry-neutral configuration helps to diversify industry risks, laying a solid foundation for investors to pursue medium and long-term stable value growth.

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Balanced large-cap + profitable expectations highlight investment value.Additionally, the CSI A500 Index is a large-cap style index that exhibits a more balanced characteristic in terms of market capitalization distribution. Its constituent stocks include both large-cap blue-chip stocks with a market capitalization of over 100 billion and small and medium-cap stocks with a market capitalization of less than 20 billion, forming a broader market capitalization coverage. Wind data shows that as of October 18th, the proportion of constituent stocks in the CSI A500 Index with a market capitalization of over 100 billion accounted for a significant 62.46%. Large-cap leading companies have lower potential risks, and their profitability and cash flow capabilities are generally better. Against the backdrop of the continuous deepening of China's economic transformation, the CSI A500 Index, with its balanced market capitalization distribution and forward-looking industry layout, may better adapt to the wave of industrial upgrading and demonstrate unique investment value.

In terms of performance, the CSI A500 Index has shown superiority in long-term performance, effectively reflecting the development status of representative listed companies in China. Wind data indicates that as of October 25th, since the base date of December 31, 2004, the CSI A500 Index has accumulated a growth of 365.59%, significantly outperforming the Shanghai Composite Index, CSI 100, and CSI 300, and other broad-based indices during the same period.

Su Huaqing, the拟任 fund manager of the upcoming Fuguo CSI A500 ETF Initiated Connecting Fund, stated that the inclusion of ESG "minefield detection" indicators in the CSI A500 Index, along with the addition of industry-neutral processing, signifies the evolution of broad-based indices from representative indices to investable indices, ushering in a new chapter in index investing. For a wide range of investors, at the current juncture, investing in the Fuguo CSI A500 ETF Connecting Fund to position in the CSI A500 Index may capture investment opportunities in the core assets of A-shares.