Closer to home, today we will actually talk about which funds are still worth holding on to even if they are still far away from returning their original capital.

Today is another day when Big A became a hot search topic due to his ability. When Xiaoxia was "mingling" in major fund exchange communities, she discovered two types of Christians with completely different attitudes.

A kind of Christian is determined to sell you even if he loses money.

I finally lost money and sold you today. The "rubbish" will never buy it again!

A kind of Christian is deep in the position and willfully covers his position

Give me a profit after you have enough food! I’m still optimistic about you~ I’ll cover another 10% of my position!

Which one is right or wrong? It’s hard to summarize. After all, can determine that the funds of will "increase" in the future, which are probably the ones that have just been sold, those that have been added to the selection but not bought, other people's funds, and those that cost 10 yuan to test the water.

Let’s get back to the topic. Today we will talk about which funds are still worth holding on to even if they are still far away from getting back their original investment.

#1

Some useful truisms

You can be unhappy because a fund fails to help you make money in the long term, but it is not worth being angry because the fund draws sharply.

Principle 1: The power of rising is accumulated in the decline

Because risk and return are inherently integrated, "the stock market is like the sea, with ebb and flow. The rising process accumulates the energy of falling, and eventually leads to a fall; During the falling process, the energy of rising is accumulated , and eventually lead to a rise ", (Source: Howard Marks "Cycle" book) For excellent funds, every squat is for a better start.

As evidenced by data, since 2005, the partial-stock hybrid fund index has experienced many deep declines and corrections. However, after a short rest, it can still reach new highs. In the past 17 years, the partial-stock hybrid fund index has increased cumulatively. Reached 264.35%. (Data source: Wind)

Reason 2: The profits and losses of Christian behavior lower returns

However, there are also many Christians who leave the market without making any money, because The investment income of Christian investors = market income β + fund manager α + fundamental People’s behavioral gains and losses. (Note: Only active funds have fund managers α)

The insight report shows that from 2016 to 2020, Christian investors lowered their final returns by 11.61% due to wrong investment behaviors such as premature profit and loss stops. This is what is called "a fund manager". The operation was fiercer than that of a tiger, and the profit was minus fifteen." (Source: "Insight Report on Profitability of Public Equity Fund Investors")

When you can't see clearly, Xiaoxia suggests simply "doing nothing is better than doing something". If you exit blindly during the retracement, you will probably also You will miss the subsequent rise.

Of course, it would be better if we could accurately determine which funds have sufficient momentum to rise in the market outlook and have the potential to grow, and which funds are "unsupportable". It would be better to stop losses as soon as possible or choose wisely.

Xiaoxia analyzed the historical performance of thousands of equity funds, found out the reasons for the in-depth adjustments of these funds, and summarized the characteristics of funds that can achieve explosive performance in the future. Let's take a look.

#2

What are the reasons for the deep adjustment of the fund?

Category 1: The market has experienced a bear market, the broader market has experienced a deep correction

The largest retracement of equity funds is often related to the "severe winter" experienced by the A-share market : such as the 2008 financial crisis, partial stock hybrid The fund index has a maximum retracement of 56%. After the stock market crash in 2015, the stock hybrid fund index has a maximum retracement of 43%. The 18-year trade war + de-leverage , the partial stock hybrid fund index has a maximum retracement of 27%. %. (Data source: Wind)

Category 2: Fund style is not favored by funds at the time

Market style is crucial to the periodic performance of the fund, and market style is the preference of funds.

For example, from October 2016 to the end of 2017, there was no systemic risk in the market, and the stock hybrid fund index rose by 14 points.

But at that time, the capital preference was White Horse and blue chip . The performance of the large-cap value fund was eye-catching, while the small-cap growth index fell 15 points. Since the style was not dominant, the stock selection at that time mainly focused on funds in the small-cap growth field. The net worth retracement is deep. (Data source: Wind)

(Data source: Wind)

Category 3: Heavy industry suddenly encounters strong policy supervision

In the past few years, many industries have actually not had a smooth road.

The 2011 train accident, the "Eight Regulations" at the end of 2012, the 2018 pharmaceutical centralized procurement and immortality biological incidents, and the 2021 platform economy strong supervision have respectively caused the stock prices of high-speed rail, liquor, medicine, and the Internet sector to plummet, ushering in the new era. Dark hour.

Category 4: black swan is coming, and the industry is in periodic recession

The black swan of the new crown epidemic suddenly arrived in 2020, and has been repeated under normal conditions in the past two years. Consumer service-related industries such as theaters, aviation, tourism, hotels, airports, The normal operations of some companies in the catering and other sectors will also be affected, resulting in periodic poor performance.

Category 5: The short-term gains of heavyweight stocks are too high, and valuations need to be digested

Whether it is the plunge of core asset group stocks after the Spring Festival in 2021, or the correction of popular growth tracks such as "Xinguang Banjun" after New Year's Day in 2022, these The adjustments that have attracted much attention from the market are all related to the excessive early growth, the congestion of institutional positions , and the valuation quantiles reaching historical highs.

Category 6: Strong cyclical industries, "not open for three years"

There are many cyclical industries for A-shares . Cyclical stocks are known as "not open for three years, open for three years", such as coal, oil, steel, Chemicals, gold, non-ferrous metals, etc., the prices of such commodities fluctuate greatly, causing the industry to show cyclical fluctuations, including the "pig cycle" that is related to the national economy and people's livelihood.

Category 7: Fund managers make mistakes in seizing opportunities

In addition to market income β, fund manager α will also have an impact on the fund’s income. There are different reasons why the fund manager's operation failed to help investors maximize their returns. It may be that the stocks with heavy holdings suddenly experienced thunderstorms, or there were errors in the proportion and timing of the allocation of sectors and stocks , which may lead to shortfalls or reversals. withdraw.

#3

How did the performance of funds after a deep decline explode?

Category 1: Follow the rising tide of the market and lift all boats

The poor performance of many funds this year is due to the general decline caused by the deep adjustment of the market. When complex internal and external negative factors interweave, investor sentiment is relatively pessimistic, and good stocks will be wrongly killed. As a result, related funds were dragged down.

However, as the negative factors in the market gradually unravel, investor sentiment will turn to optimism despite hesitation. Excellent funds can regain their glory and follow the rising market tide. The market rebound since the end of April is due to some negative factors. Get better.

The second category: style is stable, wait until the "wind" comes

In the past 20 years, the market style, that is, the preference of funds, has switched back and forth between large/medium/small cap and growth/value styles, and one style will not always be preferred.

Prospects and confidence in economic and industrial trends are important factors that affect the large-cap/small-cap style. The stage of the economy and the degree of loose liquidity are important factors that affect the value/growth style.

However, there is no good or bad distinction between styles, because the short-term performance difference caused by style switching may gradually narrow in the long term, and the final income level is also expected to become consistent.

For example, the cumulative returns of value and growth styles relative to the CSI 300 since 2006 are as follows:

As long as fund managers can adhere to their own stock selection styles and hold stocks with high quality and strong profitability in their styles, they may wait until the "wind" "Come, get the preference of funds, and research shows that the winning rate of stable style funds is higher than that of funds with style drift.

Category 3: Heavy industry policy changes, warm wind blows frequently

Taking history as a lesson, how did the high-speed rail, liquor, pharmaceutical and other industries that once encountered strong supervision later usher in the return of value? The general interpretation method is "sudden" Events - intensive introduction of reforms or policies - decline in stock prices of related industries - construction of a new regulatory framework - stock prices building a bottom" (Source: Soochow Securities ).

After the regulatory body was partially completed or the policy changed, the market moved forward amid hesitation, broke out while waiting and watching, gradually broke through the previous high and ushered in a large-scale market, providing a good example for Hong Kong stocks Internet, which is now experiencing policy recovery. .

Category 4: The industry is in its golden period, and the penetration rate of and is rising rapidly.

If you can understand the life cycle of the industry, you can enjoy the growth dividends brought by the rapid increase in penetration rate.

Generally speaking, the stage when the penetration rate increases from 10% to 60% is an explosion period of technology/innovation and a golden period for investment in the track, which can form the effect of "one super, many strong, and one point leads to an area". (Data source: Investment Strategy)

For example, new energy vehicles. According to the latest data from the domestic passenger car industry, by the end of May 2022, the penetration rate of domestic new energy vehicles will reach 26%, which is a significant increase from the penetration rate of 5.8% in 2020. ,The new energy vehicle sector has also risen by 153% from 2020 to now, bringing huge profits to the majority of investors. (Data source: Wind)

In the future, with the rapid increase in the penetration rate of new energy vehicles, the investment opportunities in the sector will still have endless room for imagination.

Category 5: The valuation of the industry is reasonable enough and the fundamentals are good

Funds are always pursuing profits. Everyone wants to buy cheaply and buy good things, that is, the purchase is cost-effective.

When some sectors are crowded at high levels and the margin of safety is not that high, some funds may want to look for "valuation depressions" and look for sectors that look safer and are also excellent. These sectors are expected to reverse at the bottom and welcome the to break through.

For example, in this round of market rebound, the consumption, pharmaceutical and other sectors have successively made up for their gains. This is the logic. As long as the valuation is reasonable enough and the fundamentals are excellent, it is expected to attract the attention of funds, especially in line with the consumption upgrade, energy upgrade, and technology upgrade. Trending sectors.

Category 6: uptrend cycle

Taking the pig cycle as an example, the "pig breeding" sector can be said to be an investment opportunity with "definite space but uncertain time". It is generally recognized that will definitely come, and will definitely come. , what differs is when the main rising wave will come.

Generally speaking, during each pig cycle, the pig breeding sector will experience two typical rounds of rising stages.

• The first round of rising market will reflect the expectation of future rise in pig prices in advance, and at this time the pig price is still in the process of bottoming out
• The second round generally corresponds to the start of the pig cycle. As the price of pigs continues to rise, the price of pigs will continue to rise. The stock price of the breeding sector will also rise significantly. (Source: Everbright Securities )

However, according to Xiaoxia’s observation, every friend who is involved in the pig cycle has different logics, different expectations, and different timings of jumping-off, so the complexity of sector investment is still relatively high. If it is high, cyclical active funds that choose to focus on pig opportunities have a higher winning rate.

Category 7: The negative impact of the black swan has improved marginally

Taking the tourism sector as an example, the sector’s continuous decline is mainly due to the black swan of the epidemic.

However, with the advancement of the research and development of new coronavirus specific drugs, the further advancement of COVID-19 vaccination and the maturity of the epidemic prevention system, domestic and foreign travel is expected to resume.

At the same time, since the epidemic, the country has successively promulgated high-quality development and support policies for the tourism industry. New opportunities are born in the logic of reversal of difficulties. In the future, as the "black swan" flies away or is properly controlled, high-quality targets are expected to catalyze performance. Continue moving forward.

Category 8: Fund managers have a strong ability to obtain alpha returns

For actively managed equity funds, we should not pay too much attention to the short-term performance of the fund. The long-term investment level of the fund manager is what Christians should pay attention to. boundary of safety.

An important reference indicator is the fund's alpha. The greater the alpha coefficient, it usually indicates that the fund manager's stock selection ability is stronger.

Alpha coefficient can be found on the official website of Morningstar China, a fund evaluation agency, by entering the fund code. For example, for the fund in the picture below, the alpha coefficient relative to the performance benchmark is 36.11%, which is the "excess return" achieved by the fund manager relative to the benchmark.



(Source: Morningstar China official website)

If the fund you hold is the same as the one above and can achieve a positive alpha coefficient relative to the benchmark index and the average of similar categories, then even if you do not meet any of the above conditions for "explosion" of performance, you There is no need to worry, just hold it firmly and believe that the fund manager's ability to adjust positions and select stocks will help you outperform the market and obtain better returns in the medium to long term.

Okay, let’s talk about this first today, If the fund in your hand falls into any of the above situations, it is recommended to hold it and cherish it, and actively cover your position when there is a decline~ I wish everyone smooth investment and financial management~

Risk warning

The opinions in this material are for reference only and do not serve as any legal document. All information or opinions expressed in the material do not constitute final operational advice on investment, law, accounting or taxation. Our company does not make final operational recommendations based on the content in the material. No warranty. Under no circumstances will our company be responsible for any losses caused by anyone's use of any content in this material. The above content does not constitute individual stock recommendations. The fund's past performance and its net value do not predict its future performance, and the performance of other funds managed by the fund manager does not constitute a guarantee of the performance of the fund. The manager does not guarantee profits, nor does it guarantee minimum returns. Investors should fully understand the difference between regular fixed-amount investment of funds and savings methods such as small deposits and lump sums. Regular fixed-amount investment is a simple and easy investment method that guides investors to make long-term investments and average investment costs. However, regular fixed-amount investment cannot avoid the risks inherent in fund investment, nor can it guarantee investors’ returns, nor is it an equivalent financial management method that replaces savings. The market is risky and you must be cautious when entering the market.