In page navigation
How to invest in CSI 1000 index funds in 2023
Get started in minutes with our preferred broker,. 10/10
77% of retail CFD accounts lose money.
It only takes a few minutes to invest in the CSI 1000 index. One of the simplest and most popular ways to invest is to buy shares in a Vanguard CSI 1000 ETF through an online trading platform.
Where can I invest in the CSI 1000 index?
According to our expert research, eToro is the best ETF broker to invest in CSI 1000 index funds.
Both CSI 1000 ETFs and CSI 1000 CFDs are available to invest in through eToro .
Here are three more places to buy the CSI 1000, ranked according to their cost, security, and features.
77% of retail CFD accounts lose money.
How do I invest in the CSI 1000 index?
The easiest way is to sign up to a stock broker, open an investment account, and buy shares in an CSI 1000 ETF or CFD. This guide explains how to do it:
Step 1. Sign up to eToro
We recommend using eToro to invest in CSI 1000. Sign up for a brokerage account and deposit some money. You may need to supply a form of photo ID to verify the account.
77% of retail CFD accounts lose money.
Step 2. Decide how to buy CSI 1000
This boils down to choosing between an CSI 1000 ETF or CFD. ETFs are generally better suited to investors who want to passively track the CSI 1000’s performance. CFDs offer a greater range of trading options: you can use leverage, short the index, or buy and sell it outside of trading hours.
Step 3. Invest in the CSI 1000
Sign into your trading account and search for the CSI 1000. Hit the ‘buy’ button and enter the details of your purchase, such as how much you want to spend. Hit ‘buy’ again to execute the trade.
Step 4. Monitor your investment
When you buy a CFD, the trade goes through more or less instantly, and you’ll be able to see your new open position in your trading account. ETF purchases can take longer, and if you buy outside of traditional trading hours it won’t go through until the next morning.
Your trading account will show the price change in the CSI 1000 since you bought it, so you can see your profit/loss at a glance. Use that information, along with your own research, to decide when to sell the CSI 1000 and close your position, ideally at a profit!
The different ways to invest in the CSI 1000
As we mentioned above, there are numerous ways to put your money into the CSI 1000. ETFs and CFDs are the simplest options for beginners, but there are alternatives. Here’s a brief overview of each option and who it’s best suited for.
CSI 1000 ETFs
An ETF (exchange-traded fund) is an investment fund traded on a stock exchange, much like a stock. Exchange traded funds can hold different assets, such as individual stocks, bonds, or commodities, or serve as a proxy for a stock market index.
An CSI 1000 ETF is one way of investing in the CSI 1000. It’s simply an investment fund that mirrors the performance of the CSI 1000. When you buy shares in the fund, the value of your investment will rise or fall with the CSI 1000 itself.
ETFs are ideal for new investors because they have a very low minimum investment. You can start with a few pounds and get exposure to some of the world’s largest companies. They’re also practical if you plan on trading the CSI 1000 index, because you can buy or sell shares in the fund throughout the day.
Examples of popular CSI 1000 ETFs
- China Southern CSI 1000 Index ETF
CSI 1000 index funds
An index or mutual fund is an investment fund that aims to track the performance of a stock market index, such as the CSI 1000. It’s very similar to an ETF, in that there are low management fees and you can buy shares through your online broker.
However, there are a couple of differences. CSI 1000 index funds are only priced at the end of each trading day, so you can buy or sell shares in the fund once per day. There may also be a higher barrier to entry, through a much larger minimum investment when you invest in CSI 1000 index funds.
That means an CSI 1000 mutual fund is better suited for long term investors with a higher initial budget, where the infrequent trading and barriers to entry are far less of an issue.
Examples of popular CSI 1000 index funds/mutual funds
- China Merchants CSI 1000 Index Enhanced Fund
- GF CSI 1000 Index Fund
CSI 1000 CFDs
CFDs (contracts for difference) are a way to speculate on CSI 1000 price changes with more flexibility than if you use an ETF or index fund. A CFD is a ‘derivative’, which means it gets its value from the underlying asset – in this case the CSI 1000 – but it’s separate from it.
As a result, CFDs can be leveraged, where you borrow money to multiply the size of the trade, or they can be used to go ‘short’, where you place a trade on the index to fall in value. You can also buy and sell them outside of regular trading hours.
All of this means CSI 1000 CFDs offer the potential to outperform a fund that passively tracks the CSI 1000’s performance. Of course, you can also underperform it as well. Tools like leverage and shorting introduce a lot more risk, and are best left to experienced traders.
CSI 1000 futures
Futures contracts are agreements to buy or sell the CSI 1000 at an agreed price on a set date in the future. CSI 1000 futures are a means to predict how you think the index is going to perform over a set time frame, such as the next three or six months.
Most futures contracts involve leverage, so you only put up a small part of the total trade value (the margin) when you buy one. That makes futures more risky, and they require a bit more financial expertise to understand as well.
Some traders use futures as a hedge against the performance of stocks they own. For instance, if you own stocks that are part of the CSI 1000 then you might want to short the CSI 1000 so that you still make some money if the price falls.
CSI 1000 stocks
Another way to invest in the CSI 1000 is to buy shares in the individual stocks that the index tracks. It isn’t practical to buy every share in the index, but you can invest directly into a few of the most heavily weighted stocks in the CSI 1000 in order to get broad exposure to its performance.
The most heavily weighted stocks in the CSI 1000 tend to be the largest companies by market capitalisation. If you invest directly in those largest stocks, you gain exposure to the index without taking on the risk of all the underlying companies.
One reason to do this is that these larger companies with the highest market cap dominate the index anyway, so that it can give you the impression of a diversified portfolio while actually being reliant on the performance of those particular stocks.
For the CSI 1000 index, the largest stocks you might choose to invest in are:
The flip side of investing directly like this is that you lose the diversification and stability that comes with buying into an entire index. It requires much more hands-on management to do your own stock picking, so it’s best suited to more experienced investors.
How much does it cost to invest in the CSI 1000 index?
From $0 to $5, depending on how you invest. For each option, you must consider the cost of buying the actual asset, whether that’s an ETF, index fund, CFD, or share, plus the fees associated with it.
|Instrument||Trading fee||Management fee|
|Exchange traded funds||$0-$5.99||0-0.2%|
|Index fund / mutual fund||$0-$5.99||0.1-2%|
*A fee comparison of 3 leading brokers for example purposes
ETFs and CFDs are generally the cheapest option overall, as they have low fees and a low minimum investment. Index funds and mutual funds have low fees but may have a high minimum investment. Buying individual stocks is the most expensive option in absolute terms, because the share price of a single large company is often more than $100.
All options are likely to include a trading fee, which you pay each time you make a transaction. Some trading platforms offer zero-fee trading, with others it may be a few dollars.
Then ETFs and index funds each have their own expense ratio. Expense ratios refer to an annual management fee, charged as a percentage of your total investment. Expense ratios are usually no more than 0.05%, so if you invest $1,000, you would pay $5 per year in management fees.
Should I invest in the CSI 1000 index?
Yes, CSI 1000 investing is a great choice if you’re looking for a safer investment with more price stability compared to picking individual stocks. It gives you an instantly diverse portfolio with exposure to a broad area of the stock market.
The flip side is that you have less control over which companies you invest in. An index committee decides how the index works, and you can’t pick and choose the underlying companies you like the most. The CSI 1000 is better suited to hands-off investors, compared to those who have the skills, experience, and desire to pick their own stocks.
What are the advantages of investing in the CSI 1000 index?
An index provides instant stock market diversification, where you spread your risk across a large number of underlying companies, rather than one or two. Here are some more reasons why you might want to invest in the CSI 1000 index:
- Get access to a diversified portfolio of stocks. The CSI 1000 contains a large number of stocks. By investing in the index, you take ownership of a piece of all the companies listed, across a wide variety of industries.
- An index is an ideal way for a beginner to invest. You can invest in the CSI easily through your stock broker. It’s just like buying stock in a company.
- You can start with a small amount of money. It’s cheaper to invest in an index compared to buying stock in lots of companies. You can invest in a CSI ETF with just a few pounds.
- Invest in the Chinese market. The CSI is one of the leading indices in China and so by investing in it you can put your money into the Chinese market. It can offer a good way to diversify away from western markets, or invest in an economy that you expect to grow over time.
What are the disadvantages of investing in the CSI 1000 index?
The main risk of investing in the CSI 1000 is that all the underlying companies are related in some way, so a broader economic downturn that affected the entire country would likely affect many stocks in the index at the same time. Here are some more risks of CSI 1000 investing.
- All stocks are tied to the performance of the Chinese economy. While the stocks on the CSI 1000 are from a wide variety of industries, they are all linked by the fact they’re based in China. Any issue that affects the Chinese economy may affect all the stocks, and thus your investment as a whole.
- The Chinese government’s actions are unpredictable. China is different to the US or European stock markets, because the government can take a more interventionist attitude towards individual companies. It’s very hard to predict how the government might act or what its impact might be, but it can have a large impact on your investment.
An ETF is a better option if you want to be able to buy and sell shares in the CSI 1000 throughout the day. An index fund is better suited to long term investors with a larger initial sum to invest.
An ETF is the best way for a beginner to invest in the CSI 1000 index. It’s easy to buy shares in an ETF and the costs are relatively low. You only have to pay the trading fees and a small annual management fee.
Yes, if you choose the right online broker. Not all brokers offer index investing, so make sure to find a broker that offers the CSI 1000 index before you sign up.
The CSI 1000 itself does not pay dividends, but many companies listed on it do. If you invest in an CSI 1000 index fund or ETF then you will receive a percentage of the dividends paid out by those companies, based on the number of shares you own in the fund.
The China Southern CSI 1000 Index ETF is the best fund to invest in to get a piece of the Chinese market.
More indices to invest in
Invezz is a place where people can find reliable, unbiased information about finance, trading, and investing – but we do not offer financial advice and users should always carry out their own research. The assets covered on this website, including stocks, cryptocurrencies, and commodities can be highly volatile and new investors often lose money. Success in the financial markets is not guaranteed, and users should never invest more than they can afford to lose. You should consider your own personal circumstances and take the time to explore all your options before making any investment. Read our risk disclaimer >