When buying funds, since each fund may have many different funds, further screening is needed. When screening funds, you need to use some indicators. So, what indicators are better to use when choosing a fund?
What indicators are better to look at when choosing a fund?
1. Look at the cumulative rate of return trend. Through the trend of cumulative yields, we can see whether the returns of a fund over the years are generally rising or falling, or not rising or falling. Obviously, only funds with upward trends in cumulative returns are worth buying.
In addition, when looking at the cumulative rate of return of the fund, you can also see the comparison of the cumulative rate of return of the fund and similar funds. If the cumulative rate of return of the fund is rising, and the cumulative rate of return is higher than the average value of similar funds, it may be a relatively good fund.
However, the cumulative yield trend cannot be seen too short, otherwise the meaning of reference will not be very big, at least it will take more than one year or even longer. Therefore, this indicator is not very suitable for funds with a shorter period of establishment.
2. Depend on the size of the fund. The size of the fund can show the strength of the fund on the one hand, and on the other hand, it can also reflect investors' preference for the fund. The scale of
fund is relatively large, which can better diversify investments and is also more capable of dealing with some uncontrollable factors, thereby reducing the non-systemic risks of . Moreover, the fund is large in scale and the risk of passive liquidation is relatively small. The opposite is true if the fund size is too small.
In addition, most of the funds owned by the fund are raised from investors. If the fund is large, it means that the fund may be more popular with investors.
Although funds that are popular with a large number of investors may not be good funds, if the fund is not good at all, investors will likely vote with their feet and stay away from it. Over the long term, the scale of such funds will be difficult to increase.
However, a good fund is not as large as possible. Because the larger the fund, the greater the management difficulty, the more it will be, and its returns may not be as good as some smaller ones.
3, look at Sharp ratio . Sharpe ratio is an indicator that combines fund yield and risk to judge the quality of the fund. Its function is to see what the marginal rate of return each fund can generate when the risk increases. For example, when the ratio of Sharp is 1, it means that every 1% increase in risk can increase the return by 1%.
It is obvious that the higher the Sharp ratio, the more increments of gains can be brought with each increase of the same amount of risk. When other conditions are similar, the more worth buying such a fund.
4. Look at the time of the fund establishment. . Whether a fund is good or bad, it will only be known after passing the time test. The fund has been established for a long time and has experienced a richer market environment. If it can survive under various tests and still live better, there is reason to believe that it can still survive various tests in the future.
The fund's establishment time is short and there is not enough time to go through various tests. Good or bad still needs to be verified. Although this kind of fund may not be bad, the risks to take are still greater.
5. Look at the maximum drawdown of the fund. The risk of fund investment comes from the decline of the fund. Through the maximum drawdown of the fund, it can be seen to a certain extent whether a fund is doing well or not in risk control.
For similar funds, the risk control is better if the maximum drawdown is smaller. If other conditions are similar, the fund will be more worth buying.
