01 Quietly Rising to Become a "Hidden Champion"

Since the "9.24" market surge last year, the A-share market has experienced a new upward trend, driven by both policy tailwinds and economic transformation.

Amid this wave, a previously less prominent broad-based index—the CSI A500—has quietly emerged as a "hidden champion": Since the rally began, it has surged by 31.16%, outperforming both the CSI 300 (+28.32%) and the SSE 50 (+24.38%). Even in this year’s volatile market, it continues to lead with a 6.03% gain, attracting continuous inflows into CSI A500-related ETFs.

Take E Fund A500ETF (159361) as an example—it saw net inflows for four consecutive weeks in July, with new shares exceeding 2 billion.

Thanks to its unique "sector-balanced + niche leader" methodology, the CSI A500 has accurately captured this year’s rapidly rotating sector trends—from tech growth (representing new productive forces) to industrial manufacturing (supported by economic transformation). It acts like a finely woven "sector net", capturing the upside potential of emerging industries.

Even more intriguing is how this index’s stock selection criteria are subverting tradition: "bloated giants" (large in market cap but lagging in industry rankings) are excluded, while hidden champions in niche sectors become core holdings.

Why has it become the new darling of capital? And how has it turned into a convenient tool for ordinary investors to tap into China’s economic transformation with a single click? The answers lie in its "global experience + local innovation" methodology.

02 The "Evolution" of Broad-Based Indices

The CSI A500 innovates in its construction philosophy. It doesn’t dismiss the importance of market cap but builds upon the mature "market cap + liquidity" screening criteria by introducing sector balance as a key dimension.

Globally, the S&P 500 serves as a barometer of the U.S. economy precisely because of its sector balance. Over the past 40 years, every major shift in the U.S. economic structure has been reflected in adjustments to the S&P 500’s sector distribution. The CSI A500 takes this a step further with localized innovations:

1. Strict fundamental thresholds: Only stocks within the top 1,500 by free-float market cap and top 90% by average daily turnover are selected, ensuring market recognition.

2. Dynamic sector weighting: Adjusts weights based on free-float market cap at the primary industry level, aligning each sector’s proportion with the CSI All Share Index to prevent financial stocks from dominating.

3. Focus on niche leaders: Selects "little giants"—companies with at least 2% free-float market cap share in their third-tier industry—ensuring true industry leaders are included.

This approach may exclude "bloated" large-cap companies with weak industry positions but gives smaller yet dominant niche players a chance to shine.

After these innovative upgrades, the CSI A500 exhibits the following distinctive traits:

• Broader market representation: Covers large, mid, and small caps with balanced sample structure.

• Wider industry coverage: Includes 91 out of 93 third-tier A-share industries, minimizing missed growth opportunities.

• Stronger leadership effect: Focuses on true leaders in niche sectors.

• More dynamic economic snapshot: Higher proportion of private enterprises.

• Higher-quality screening: Combines ESG standards with Stock Connect eligibility, improving profitability while facilitating foreign investment.

Rather than simply piling on large-cap stocks, the CSI A500 meticulously constructs a portfolio of high-quality companies with balanced sector exposure and clear leadership traits—acting like a "mirror" that accurately reflects China’s economic transformation.

In this "mirror," companies representing new productive forces receive due attention, while high-quality traditional firms also find their place.

For investors, choosing the CSI A500 isn’t just about picking an index—it’s about adopting a more scientific, balanced, and economically aligned allocation strategy. This may well explain its resilience in volatile markets.

03 From "Fear of Missing Out" to "Strategic Positioning"

With the A-share market oscillating around 3,600 points, a clear divergence has emerged—"some retreat while others rush in."

Investors are torn between FOMO (fear of missing out) and regret over holding underperforming stocks. To navigate the uncertainty of rapid sector rotation, a reliable broad-based index is crucial.

The CSI A500 may be the answer—it aggregates leading stocks across niche sectors, offering investors a steady allocation path.

From a fundamental perspective, broad-based indices are showing signs of profit recovery.

Earnings reports reveal that many niche sectors are already exhibiting high growth, with some even hitting inflection points. As China’s economy approaches an upward turn, A-shares may see a more fundamentally supported rally.

Moreover, stabilizing macro credit conditions are fueling the CSI A500’s valuation upside.

The index’s valuation fluctuations align with China’s medium-to-long-term credit expansion trends. With long-term interest rates (a leading indicator of credit cycles) signaling an upturn since early 2025, the CSI A500’s valuation recovery is poised for solid fundamental support.