Why can the undervalued value stock index reach a new all-time high?

Market hot-spot rotation is always fast and frequent, and it’s quite difficult for investors to precisely catch the right timing. During the chase for momentum, however, some people have gradually found that there is an index in the market worth paying attention to: over the past 12 years, its annualized returns have exceeded 18%, and it even reached a historical high amid the high-volatility market environment since March (2026/3/13). That index is the GuoZheng Value 100 Index (980081).

I. Performance speaks: strong long-term returns, suitable for the full cycle

When evaluating an index, performance is always the toughest proof. The standout feature of the GuoZheng Value 100 Index is not a burst over any single period, but rather steady progress and full-cycle applicability. Whether the market is rising or falling, it can deliver relatively impressive results.

In terms of long-term performance, as of March 20, 2026, the GuoZheng Value 100 Total Return Index has an annualized return rate of as high as 18.2% since 2013, far exceeding the 7.4% of the CSI 300 and the 11.5% of the CSI China Bond Dividend. By year, it has only had negative returns in 2018, and the maximum drawdown has also been better controlled.

Table: Performance of the GuoZheng Value 100 Index

Note: Data source: Wind; the time range is 2012/12/31-2026/3/20, using the total return index.

From different market environments, its “full-cycle advantage” is even more prominent: if we split the market environment since the index base period into bull markets and bear markets, we can see that, except for extreme bull markets, the GuoZheng Value 100 Index can generally outperform the CSI China Bond Dividend and the CSI 300. In bear markets, it exhibits resilience similar to, or even stronger than, the CSI China Bond Dividend; in bull markets, it generally has stronger upside participation compared with the CSI 300, and its bull-and-bear-agnostic characteristics are clearly evident.

Table: Comparative index return performance under different market environments

Note: Data source: Wind; the time range is 2012/12/31-2026/3/20, using the total return index.

II. Stock-selection logic: triple undervaluation screening, balancing drawdown resistance and upside

The GuoZheng Value 100 achieves “steady progress and full-cycle fit” at its core because it never forgets its “value” original intent. It does not chase hot spots or trade on concepts. Using three undervaluation yardsticks—“high free cash flow yield + high dividend yield + low price-to-earnings ratio”—it filters for value stocks with more reliable quality and relatively lower prices while preserving the advantage of high dividends. This stock-selection logic can be understood plainly as: selecting companies that make “more (high free cash flow yield), pay out more (high dividend yield), and are still cheap (low price-to-earnings ratio).”

Figure: Valuation indicators: “price/value”

Compared with the CSI China Bond Dividend that only screens for “high dividend,” and the GuoZheng Free Cash Flow Index that only screens for “high free cash flow,” the GuoZheng Value 100 takes the best of both: it has the “steady tone” of the CSI China Bond Dividend, as well as the “earnings upside” of the free-cash-flow index. It is a balanced value index that is both drawdown-resistant and has upside.

Table: Comparison of index return characteristics

Note: Data source: wind; 2012/12/31~2026/3/20; using the total return index.

III. Win with flexibility: rule-based rotation, don’t chase hot spots—make money instead

If the triple undervaluation stock-selection logic is the foundation for the GuoZheng Value 100 Index’s ability to stand firm and outperform, then the key to its long-term outperformance lies in the rule-based mechanisms—quarterly re-sampling that leads to disciplined selling high and buying low, along with sector rotation.

Index re-sampling, put simply, means that the index periodically (usually divided into every year, every half-year, and every quarter) conducts a qualification review of its constituent stocks. Stocks that do not meet the screening criteria are removed, while new eligible targets are added. In essence, it ensures—through disciplined action—that the index always stays aligned with its own stock-selection logic.

Taking the GuoZheng Value 100 as an example, according to the re-sampling mechanism specified in the index construction rules: when a constituent stock experiences deteriorating operations, or its stock price rises leading to an increase in valuation, and thus no longer meets the triple undervaluation screening criteria of “low price-to-earnings ratio + high dividend yield + high free cash flow yield,” it will be removed during the quarterly re-sampling in accordance with the index construction rules. Meanwhile, some targets with even lower valuations will be added. This is how it achieves what we commonly call “sell high and buy low.”

This “sell high and buy low” is not only reflected at the single-stock level, but also at the industry level: if the stock prices in a hot sector drive valuations to climb quickly, then in the subsequent regular re-sampling of the index, the related targets are more likely to be rotated out and the sector weights will gradually decline. On the other hand, if a low-valuation sector is still trading at low levels and its fundamentals have already improved, then in the subsequent regular re-sampling of the index, the chances for its weight to be increased will be greater.

Looking at the historical changes in the index’s industry allocation, one fairly typical rotation example is the coal sector. In 2019–2020, the market was obsessed with core assets such as liquor, while the coal sector received little attention. Yet the GuoZheng Value 100 Index could discover the coal sector’s potential value through its selection mechanism, thereby increasing its weight in an inverse manner. Then, when core assets corrected in 2021, it benefited significantly from the coal sector’s rise. In 2024, as the coal sector’s price went up and valuations increased, its weight in the index naturally fell through regular re-sampling, which also reduced the risk brought by subsequent pullbacks.

Figure: Sector changes in the GuoZheng Value 100 Index

Figure: How the GuoZheng Value 100 Index increases and decreases exposure to the coal sector reflects “undervaluation” + “contrarian thinking”

Note: Data source: wind; 2012/12/31~2025/5/27; using the total return index.

This disciplined passive rotation does not require investors to time the market or adjust their holdings themselves. The index itself completes the “sell high and buy low.” It saves investors time otherwise spent tracking the market, and it also helps avoid pitfalls caused by subjective misjudgments, chasing rallies, or selling into panic.

The fact that the GuoZheng Value 100 reaches historical highs in a high-volatility market is never a coincidence—its hard logic lies in “undervaluation + high dividends + high cash flow,” supported by disciplined quarterly re-sampling operations and also by its steadfast implementation of value investing. In this “involution” market where people chase hot spots and make quick money, it uses long-term steady performance to prove that by not getting caught up in the herd and not following the crowd, and by holding high-quality value stocks, you can go farther.

If you’re also tired of repeatedly stepping into traps during hot-spot rotations, you might consider participating in this value-investing feast through products that track the GuoZheng Value 100 Index**: Value ETF by E Fund (159263)**, as well as its linked fund (Class A: 025497, Class C: 025498). Use rules to counter human nature; cross market turbulence with value—slowly collect the dividend of time.