Compared to other actively managed funds, index funds offer the following advantages:

(1) Tracking benchmark indices provides significant cost advantages, allowing investors to "earn returns as the index rises";

(2) Effectively reduces non-systematic risks and fund managers' moral hazards;

(3) Strong predictability of fund returns, with relatively stable performance, making them suitable for long-term investment by individual investors;

(4) Serve as an effective tool for domestic and international institutional investors to invest in the Chinese market, especially with the introduction of the Qualified Foreign Institutional Investor (QFII) policy. Index funds will become the preferred investment vehicle for QFIIs entering China's securities market.

Investment guru Warren Buffett once discussed index funds in his letter to shareholders. He stated that for most institutional and individual investors, investing in low-cost index funds is the best way to own common stocks.

In 1971, Barclays Global Investors launched the world's first index fund. Currently, there are over 160 index funds in the U.S. market, with the largest being the Vanguard 500 Index Fund, which has a net asset size of approximately $82.2 billion. In contrast, the number of domestic index funds in China is still relatively small, such as Tian Tong 180 Index Fund, Hua An SSE 180 Index Enhanced Fund, Bosera Yu Fu Fund, and Rongtong Shenzhen 100 Index Fund.