Read the first book to understand investment and financial management

Chapter 19 Investing in Funds, Raising a "Golden Fund", Safe and Worry-Free (2)
The essence of investment is a reasonable ratio of risk and return, and the growth rate of net worth is only an apparent manifestation of fund performance. To fully evaluate the performance of a fund, it is also necessary to consider the risks borne by the investment fund.There are many indicators for examining fund investment risks, including volatility, Sharpe ratio, turnover rate, etc.

For ordinary investors, these indicators may be too professional.In fact, some third-party fund rating agencies have provided us with these data, and investors can easily understand the risks borne by investment funds through these channels, so as to guide their investment in a more targeted manner.Professional fund rating agencies, such as Morningstar, provide weekly performance rankings and perform performance calculations and risk assessments on products managed by various domestic fund companies.

Take the funds under Invesco Great Wall Company as an example. The company currently manages seven partial stock funds, all of which have an annual return rate of more than 30%.Are investors taking high risks while obtaining high returns?According to data from Morningstar, the annual net value fluctuation of stock funds under Invesco Great Wall is about 18%, and the risk is low; the market average Sharpe ratio is around 16, and the funds under Invesco Great Wall are generally at the upper-middle level in the industry. Up to 374.After investors understand these data, they will have more confidence in investing in the company's fund products.

[-]. Comprehensive consideration
When investors evaluate a fund, they also need to comprehensively examine the performance of other funds of the same type managed by the company.

"Outstanding beauty" cannot explain the problem, only "blooming in full bloom" is trustworthy.Only when the overall performance is balanced and excellent can it be shown that the performance of the fund is not due to some specific factors, but because the company has established a strict and standardized investment management system and process, and the overall strength of the investment team is strong and harmonious. Only such performance can be guaranteed. Reproducibility.

Only choose the right ones, not expensive ones, and choose funds based on making money.This requires a comprehensive evaluation of the fund in advance to accurately judge the earning power of the fund.

Teach you to calculate the total return of the fund

How much money did the fund make?I believe this is the first thing every investor wants to know.We define the fund's income in a certain period of time as the total return, which is the most basic way to measure the fund's past performance.There are two sources of total return: one is income return, that is, the dividends and interest income received by the fund within a certain period of time, such as dividends, bond interest and bank deposit interest, etc.; the other is capital return, which reflects the stock held by the fund The rate at which bond prices rise and fall.

The first thing to know is the NAV of the fund, which is the basis for calculating the total return.Total return is expressed as the growth rate of the NAV of the unit fund over the period.

The net asset value of the fund is at a certain point in time, the balance of the total market value of the fund assets after deducting liabilities, which represents the equity of the fund holders.Unit fund net asset value, that is, the net value of fund assets represented by each fund unit.

Unit fund net asset value = (total assets - total liabilities) ÷ total number of fund units
Among them, total assets refer to all assets owned by the fund, including stocks, bonds, bank deposits and other securities; total liabilities refer to the liabilities formed during the operation and financing of the fund, including various expenses payable to others and interest payable on funds etc.; the total number of fund units refers to the total amount of fund units issued at that time.

The process of calculating fund assets according to the fair price is the valuation of the fund, which is the key to calculating the net asset value of the unit fund.Since the market prices of stocks, bonds and other assets owned by the fund change, it is necessary to recalculate the net asset value of the unit fund on each trading day.The net value of closed-end funds shall be announced at least once a week, and the net value of open-end funds shall be announced every trading day.

Valuation methods are very important.For example, the listed and tradable securities owned by the fund, such as a certain stock, are valued according to the market price (average price or closing price) listed on the stock exchange on the valuation date.Valuation by the average price, the change of the net asset value of the fund is less affected by the fluctuation of the stock price.

For open-end funds, the unit net value is the basis for their valuation, that is, the purchase or redemption price depends on the day's fund unit net value (usually announced the next day), plus or minus the corresponding transaction costs.Due to the limited issuance scale of closed-end funds, investors' demand for funds and supply of funds are not balanced, resulting in the transaction price being higher or lower than the net value of the unit, which is called premium transaction or discount transaction.At present, domestic closed-end funds are generally traded at a discount, with a discount rate of about 20%.

For example, if the unit net value of an open-end fund at the end of last year is 1 yuan, and the unit net value at the end of this year is 105 yuan, then the total return of the fund this year is 5%. The calculation method is (105-1) ÷ 1 = 5% .This calculation does not take into account the fund's dividends and other fees (subscription fees, redemption fees, management fees, custody fees, etc.).Due to the complexity of cost factors, this article only further analyzes the total return considering fund dividends.

Funds usually distribute realized gains to investors.The basis of dividends is "net fund income", which is the balance of the fund's income return and capital return realized by selling securities, minus the expenses that can be deducted from the fund income according to law.According to the current relevant regulations, there are two constraints on dividends: one is that the fund investment must have realized net income; the other is that the dividend ratio must not be lower than 90% of the realized net income in a year.

For dividend distribution, investors have two options: one is to distribute cash; the other is to reinvest, that is, to reinvest the distributed income into the fund and convert it into a corresponding number of fund units.

After dividends are distributed, the net asset value of the unit fund will decrease.Assuming that the net value of the unit before the dividend is 106 yuan, and the dividend amount of the unit is 5 yuan, the net value of the unit will drop to 101 yuan after the dividend.

After taking into account the dividend factor, we come to calculate the total return.

总回报＝（Ne÷Nb）×（1＋D1÷N1）×（1＋D2÷N2）×…×（1＋Dn÷Nn）-1
其中：Ne和Nb分别为期末和期初单位资产净值；D1、D2、Dn分别为第1次、第2次、第n次单位分红金额；N1、N2、Nn分别为第1次、第2次、第n次分红后单位净值。

In the example mentioned above, if the fund has paid dividends twice this year, the net value of the unit before the first dividend is 106 yuan, and each fund unit has a dividend of 5 yuan, and the net value of the unit after the dividend is 101 yuan; The unit net value is 108 yuan, and each fund unit distributes dividends of 6 yuan, and the unit net value after dividends is 102 yuan.

总回报＝（105÷1）×（1＋5÷101）×（1＋6÷102）-1＝1668%
Calculating the total return of the fund can measure the performance of the fund, and then measure the quality of the fund to make a decision on whether to adjust the fund.

Funds are not stocks, not for speculation
Many investors are accustomed to "speculating" funds as stocks, purchasing when the net value falls, and redeeming when the net value rises.In this regard, a fund manager said: Funds are a good financial management tool, and should not be "speculated in funds" like "speculated in stocks".

As of June 26, 6, Great Wall Fund’s first balanced fund—Great Wall Jiuheng Fund had a cumulative net value of 8 yuan and realized dividends 1515 times. Each fund unit was distributed a total of 9 yuan. The dividend yield was as high as 029%. The net value of the fund after dividends It remains at 29 yuan.

The fund manager said that insisting on high dividends is not only for the convenience of fund holders, but also for the holders to save the transaction costs of redemption and subscription, and get real returns. . "More importantly, it is necessary to pass on such a concept to fund holders that funds are a good financial management tool and should not be 'fund speculation' like 'stock speculation'."

After years of development in the domestic wealth management market, there are already a variety of wealth management methods covering multiple levels for investors to choose from, including bank deposits, money market funds, treasury bonds, balanced funds, stock funds, and investing in stocks by themselves.In the above several financial management methods, the rate of return and risk are increasing. Among them, the rate of return of investing in stocks may be the highest, but at the same time, the risk is the greatest, and investors need to do it themselves and invest a lot of time. and energy.Funds belong to expert financial management. Using the professional advantages of fund managers, investors can obtain a higher level of income without labor and effort under the premise of controlling risks.Statistics from the U.S. securities market show that over the past 20 years, the average annual rate of return of mutual funds has reached 12%.

But now there is a strange phenomenon, some investors use funds as stocks to "speculate", purchase when the net value falls, and redeem when the net value rises.However, some investors not only did not share in the fund's income because they did not keep pace, they may even lose a lot.Some managers say the mentality of investors is understandable.Previously, it was very common for the fund's net value to follow the rise and fall of the market, and many investors were impatient.

One of the crux of this situation is the problem of equity division, and the systemic risks brought about by this have caused the net value of the fund to rise and fall with the market.After the share structure problem is resolved, the systemic contradictions will be resolved, the interests of non-tradable shareholders and tradable shareholders will tend to be consistent, the quality of listed companies will be improved, and fund managers will have more opportunities to discover high-quality listed companies .The bear market that started in July 20 has ended in June 7. China's economy will maintain stable and rapid growth until 25. The Chinese stock market already has the soil for long-term investment.

It is recommended that investors buy funds with the same attitude as buying shops.After an investor buys a store, as long as it has stable rental income, even if the price of the store rises, the investor will not easily transfer it; as an ideal financial management tool, the fund can also bring sustainable income to the holder. Why do investors need to purchase and redeem frequently?Of course, this puts forward higher requirements for fund companies. On the one hand, the net worth should not fluctuate too much, and on the other hand, there must be continuous and stable dividends. The fund is regarded as an excellent financial management tool, rather than being used as a "fund speculation" like a stock.

In addition, investors should allocate their financial assets reasonably.If an investor has 10 yuan in financial assets, he can deposit 1 yuan in the bank, 1 yuan to buy government bonds, 1 yuan to buy money market funds, 1 yuan to invest in stocks, and the remaining 6 yuan to use Buy balanced or equity funds.But you can’t invest all the 6 yuan in one fund, but you should buy more funds, so that your mind will be more peaceful, and you won’t be restless because of short-term fluctuations in the net value of a certain fund, resulting in frequent purchases and redemptions. Time, energy and handling fees, and the rate of return may not be guaranteed.

The cycle of stock investment can be long or short, but the cycle of fund investment is mainly long-term.There is an essential difference between the two investments. In actual investment, stock investment and fund investment should be treated differently.

(End of this chapter)