With the development of domestic fund industry in full swing, a large number of new investors have joined the ranks of fund investment, but investors still have misunderstandings about how to invest in funds. Then, we might as well listen to how fund management masters advise investors to invest in funds. We have summarized seven rules of Peter Lynch's fund investment, and these suggestions will help fund investors to correct their investment ideas, correct their investment mentality and even learn specific investment knowledge.
Fund investment rule 1: invest in stock funds as much as possible.
Peter Lynch is a well-known stock selection fund manager, and his preference for stocks has always been consistent. Lynch's first advice to fund investors is: invest in stock funds as much as possible.
The reason for the first rule is that, from the long-term development of the securities market, the average rate of return of holding stock assets far exceeds that of other types of assets. Therefore, if investors regard investment as a part of family long-term financial planning and pursue long-term capital appreciation, they should buy stock assets with investable funds as much as possible. For fund investors, it is to invest in stock funds as much as possible.
Lynch's first rule may be the most worrying problem for many fund investors at present: what should I do if the stock market fluctuates greatly or adjusts? Lynch's opinion is that if you can't predict the stock market adjustment well, then hold it firmly. There have been many serious stock market crashes in American history. Even if investors have not avoided these stock market crashes once, the result of long-term investment is far stronger than withdrawing from stock investment. The most important thing is that investors should not be afraid and withdraw from stock investment because of the adjustment of the stock market. Only holding stock funds for a long time can bring benefits to investors. However, this requires very strong willpower.
Lynch's first law is actually a belief about investment; That is, from the perspective of investment, the risk of avoiding stocks is actually greater than the risk of holding stocks. This experience has been proved many times by the history of global stock market development, not to mention China, which is in a period of vigorous economic and capital market development. Even after several years of bear market, the result of insisting on investing is far better than avoiding investing in the stock market. From this perspective, there is no need to worry too much about the adjustment of the stock market in the rising cycle. In the period of market fluctuation, what investors need to overcome is fear and face it with a rational attitude.
Of course, this provision does not mean that investors can blindly hold equity funds. In fact, there are two preconditions: first, this part of the funds should be aimed at long-term capital appreciation, that is, funds that do not affect the normal financial situation of individuals/families; In this way, short-term fluctuations will not bring financial pressure that may affect investment decisions. On the other hand, it is also related to the choice of funds: what kind of stock funds can insist on investing? What kind of investment methods can be adhered to? By choosing excellent stock funds and combining different investment styles, investors can actually avoid the risk of stock market adjustment better. This involves the fund investment rules mentioned later.
Fund investment rule 2: forget about bond funds
Peter Lynch's second rule of fund investment: forget about bond funds. This is in line with the investment law. Peter Lynch is famous for his preference for stock investment, but this rule is not entirely out of personal preference.
Peter Lynch has two reasons: the first reason is the same as rule 1, that is, from the perspective of capital appreciation, the income of bond assets is far less than that of stocks; The second reason is that if investors prefer fixed income, it is better to buy bonds directly. Because in practice, the income of bond funds is not better than that of a single bond, and the purchase of bond funds requires expensive subscription fees and management fees. Moreover, the longer you hold the fund, the worse the performance of bond funds relative to bonds. Peter Lynch jokingly called this rule: There is no need to pay Yo Yo Ma to listen to the radio.
Peter Lynch came to this conclusion according to the situation of American market. For domestic investors, bond funds are still a convenient channel for ordinary investors to invest in the bond market. But the effect of direct investment in bonds is not much different from that of bond funds.
Rule 3 of fund investment: evaluate according to the type of fund.
Article 3 of Peter Lynch Fund Investment Rules: Find the same type of funds for evaluation. Knowing what kind of fund to invest in is helpful to make correct investment decisions.
The reason why we should evaluate funds by fund type is that different types of funds may have different performances in different market periods and market environments. If you think that the value fund is not good because its recent performance continues to lag behind the market, you may have missed a good value fund. The common mistake investors make is that they always lose patience when they need patience most, and change jobs from value funds to growth funds. In fact, the former is about to recover, and the latter may begin to decline immediately.
Peter Lynch pointed out a basic principle for investors to analyze the comparison of fund returns, that is, investors should compare the differences of fund returns based on the same investment style or investment type, rather than simply looking at the rate of return. There are excellent funds in all styles, and excellent funds in different styles are good candidates for investors to build portfolios. If a fund frequently changes its investment style, it is not good for investors, because Lynch's experience believes that the lack of strict investment record constraints by fund managers may bring positive effects in the short term, but these are only temporary.
Judging from the situation of domestic fund industry, although the number of funds is quite large, the types of funds are still not rich enough. From the perspective of investment style, most funds belong to capital appreciation funds with unclear style, and their investment style lacks stability. Therefore, at present, investors can mainly divide the fund types according to the benchmark asset allocation ratio of the fund, such as stock type, partial stock type, allocation type and so on. With the further development of the fund industry, it will become more and more important to distinguish between richer fund types and fund investment styles. A comparative analysis of the performance of different fund types/styles will help investors find out which funds are really excellent.
Rule 4: Ignore short-term performance and choose a fund with good sustainability.
How to choose a value fund, growth fund or capital appreciation fund with excellent performance? Lynch believes that most investors choose through the past performance of the fund; What investors are most keen on is to study the past performance of the fund, especially the recent performance. However, in Lynch's view, these efforts are all in vain.
These investors usually choose the fund manager with the best performance in the last 1 year or the last six months on Lipper's list and invest their money in this fund, which is particularly stupid. Because the managers of these funds usually invest most of their money in an industry or a popular type of company and succeed. In the next year, if the fund manager is not so lucky, he may be at the bottom of Lipper's list.
This actually tells us a common phenomenon, that is, the sprint champion in the fund industry is not necessarily the long-distance champion. This is the case in foreign markets, and it is not uncommon to see the same example in the domestic market. The key is, what is the reason behind the champion? More importantly, whether the performance of the fund is stable in a longer period of time.
Therefore, Peter Lynch gave the fourth rule of fund investment: Don't spend too much time studying the past performance of funds, especially the recent performance. But this does not mean not to choose a fund with good long-term performance, but it is best to insist on holding a fund with stable and sustained performance.
This actually involves an important aspect of our evaluation of fund performance: income sustainability, which we have always stressed that investors should pay special attention to. Especially for ordinary investors, if we can't analyze the real reasons behind the recent high returns of funds, we should pay more attention to those funds that show good continuity of returns, because this can better reflect the investment management ability of fund managers than short-term returns. If you want to choose long-term investment, you must explore funds that can really bring stable returns to investors. Because in the long run, the sustainability of income is far more important than winning the income championship at one time. Unless you are a natural short-term trading enthusiast. Investors can refer to the income sustainability rating in Desheng Fund Rating, which is designed to help investors evaluate the income sustainability.
Rule 5: portfolio investment, diversification fund investment style
Peter Lynch Fund Investment Rule 5: Investors are advised to establish a portfolio when investing in funds. The basic principle of portfolio construction is the investment style of funds in decentralized portfolio.
Lynch believes that with the changes in the market and environment, a certain investment style of a fund manager or a class of funds cannot always maintain good performance, and the principle applicable to stocks can also be applied to the same fund. Investors don't know where the next big investment opportunity is, so they need to combine different styles of funds.
Peter Lynch said the group formed an all-star team. In other words, from various styles and types of funds, select excellent funds that meet other rules as candidates, and then build a portfolio from them.
In the domestic fund industry, the practice of portfolio investment has been more and more accepted by ordinary investors. However, many investors have two misunderstandings in portfolio investment: first, they are too scattered and invest their funds in many funds; This is obviously wrong. It doesn't mean that the more diversified the portfolio is, the better it is, but it should be moderately dispersed: moderately dispersed means that the number of funds in the portfolio generally does not need to exceed three; Good means that portfolio candidates are not widely cast, but selected excellent funds.
Second, most of the funds held in the portfolio have the same style, so that the income performance of each fund may actually be highly correlated, and it will not actually play the role of building a portfolio.
In these two aspects, Peter Lynch's all-star team thinking is worth learning from investors.
Rule 6 of Fund Investment: How to Adjust Fund Portfolio
When you already have a fund portfolio, how do you adjust your investment according to changes in the market? Peter Lynch put forward a simple general rule: when increasing the investment of portfolio, choose the style with poor performance in the near future to increase the investment. Note that it is not the conversion between fund investment varieties, but the adjustment of portfolio allocation ratio through additional funds.
Peter Lynch's experience has proved that this combination adjustment method can often achieve better results. The style rotation effect between fund performance is the basis of this adjustment method. In fact, the fund style rotation is based on the stock market style/plate rotation. Adjusting the combination according to this simple principle has actually played a certain role in tracking style rotation. Because in the long run, on average, buying a falling plate is less risky than buying a rising plate.
Fund investment rule 7: invest in industry funds in a timely manner.
In due course, investing in industry funds is the fund investment rule formulated by Peter Lynch for fund investors. Rule 7 is actually the application of rule 6, but the style distinction is more clearly reflected in the industry distinction.
The so-called industrial fund refers to the fund of listed companies whose investment scope is limited to a certain industry. Industry definition can be a large industry category or a sub-industry. The trend of industry funds actually reflects the performance of the industry in the stock market. Peter Lynch believes that theoretically, every industry in the stock market will have a chance to perform. Therefore, Peter Lynch's simple investment rule is to choose industries whose recent performance is temporarily behind the broader market when increasing the investment portfolio. This principle is consistent with style adjustment. What investors need to do is how to determine the industries whose performance is temporarily behind the broader market. If you study it carefully, those industries that are already at the bottom of the recession and are beginning to show signs of recovery are the best choices.
Judging from the situation of domestic fund industry, the number of domestic industry funds is relatively small at present, and there are only a few funds specifically targeting a certain industry category or sub-industry, and the coverage of the industry is far less than that of the whole market. Therefore, the investment space of industry funds is still limited. However, with the rapid development of the fund industry, this situation will soon change. With the gradual increase of industry funds, the fund investment strategy of industry funds will also find its own position.