US stocks may have long-term investment value. The three major US stock indexes have performed brilliantly in the past 10 years: judging from stock market performance, the three major stock indexes have performed brilliantly in the past ten years. The S&P 500 index has risen 185% cumulatively in the past ten years. Since 2011, the per capita income of American households has been growing steadily. As of 2022, the per capita annual income of American households has reached 39,167.92 US dollars. However, consumption is the core driving force of the US economy, and there is still plenty of room for US financial support at this stage:
According to the CBO's forecast, the federal budget deficit for the 2024 fiscal year will reach 1.9 trillion dollars, and in the medium to long term, fiscal easing is expected to continue and support the US economy. Advances in technology such as AI are expected to continue to drive the upgrading of consumer concepts, and personalization capabilities may become an endogenous driving force for the consumer industry's growth in the next 3-5 years.
The interest rate cut cycle is expected to begin within the year, and it may be a good opportunity to allocate US stocks: we believe that the risk appetite in the US market is expected to continue to improve under the expectation that the interest rate cut cycle will begin within the year. Based on the current September interest rate cut node expectations and the federal funds target interest rate, we believe that the current US reserve replenishment cycle will continue. At the same time, if the current round of US reserve replenishment cycles resonate with the pace of interest rate cuts in September, it is expected that US production and consumption will be further stimulated. Furthermore, the wealth effect is expected to continue to drive consumption growth, and the increase in household net assets and wealth effects brought about by expectations of interest rate cuts in the second half of the year are expected to provide some support for consumption.
S&P 500 Consumer Choice Index Investment Value Analysis
The S&P 500 Consumer Choice Index was released by Standard & Poor's on November 21, 2022. The purpose is to measure the 50 largest companies in the S&P 500 Optional Consumer Goods Choice Index and the S&P 500 Required Consumer Goods Choice Index. It uses free circulation market capitalization weights, while limiting the weight limits of individual companies and the top five constituent stocks, and leaving buffers to seek diversification of components within the index.
The characteristics of large market capitalization are remarkable, and the constituent stocks are diverse: the S&P 500 Consumer Choice Index favors large market capitalization companies, and the total market value of the constituent stocks all rank in the top 10% of US listed companies; the top five weighted stocks account for 44.68%, which is in line with the weight limit, which also allows index components to be more diverse; among them, Tesla, a US technology giant that can also enjoy the triple valuation premium of electrification, intelligence, and artificial intelligence, accounts for 11.89% of the S&P 500 Consumer Choice Index ETFs. The index contains the highest amount of “special” Yes. Currently, the only domestic ETF that tracks the S&P 500 Consumer Choice Index is the Invesco Great Wall S&P Consumer Choice ETF (“S&P Consumer ETF” for short, fund code “159529”).
Balanced allocation of daily and non-daily consumption: The S&P 500 Consumer Choice Index is balanced in terms of large sector allocation, covering both everyday consumer goods and high-end consumer goods; consumption is an important engine of the US economy, and as an index that allocates both daily necessities and high-end consumption in the US, it is an important index tool to help investors track the US economy and US consumption situation.
Good return and high stability: Since 2016, as of July 15, 2024, the S&P 500 Consumer Choice Index has a total revenue of 122.28%, an annualized yield of 9.75%, and an annualized Sharpe ratio of 0.58. The return is better than the Hang Seng Index, Hang Seng Consumption, Shanghai and Shenzhen 300 and 800, and the return is good; the index has an annualized fluctuation rate of 16.92% and a maximum retracement of -28.02%, all significantly better than other comparable indices, with significant low fluctuation and low retracement characteristics.
Low correlation with Hong Kong stocks and A shares: The S&P 500 Consumer Choice Index is highly correlated with the S&P 500 Index, and less correlated with Hong Kong stocks and A shares. Even indices on the same consumer circuit are also less correlated.
Therefore, the S&P 500 Consumer Choice Index may complement Hong Kong stocks and A-shares in asset allocation to reduce the overall risk of the portfolio and increase portfolio returns.
Invesco Great Wall is committed to becoming the leading fund management company for ETFs in China. As of July 15, 2024, Invesco Great Wall has a total of 16 ETFs, covering broad bases, industries/themes, cross-border and smart beta, etc., and the product line is quite complete. Among them, the Invesco Great Wall S&P Consumer Choice ETF (“S&P Consumer ETF” for short, fund code “159529”) was established on January 24, 2024 and released on February 2, 2024 to track the S&P 500 Consumer Choice Index. It is also the only domestic ETF that tracks the US stock consumer circuit.
Risk warning: US macro-environmental risks, downside consumer demand risks; this report is based on historical data analysis. Factors such as market environment and policy changes may invalidate this report's analysis.