What exactly is a hedge fund? What do you mean by short positions in hedge funds? How did it cause the hedge fund to explode? The following are the reasons for the hedge fund's short positions brought by Bian Xiao, hoping to help you to some extent.
Why did hedge funds explode?
Two main reasons:
Rising inflation expectations have hit the technology and high valuation sectors that performed best in US stocks last year.
Biden inherited Trump's China policy, focusing on economy, military and finance, including the financial blow to China Stock Exchange.
Risk transmission path:
1. Inflation expectation → interest rate of US debt rises → US technology stocks and growth stocks fall.
2. The interest rate of US bonds rose → the dollar rose → emerging markets fell → Hong Kong stock technology (Baotuan shares) fell, and China Stock Exchange fell.
3. American legislation expels China stocks → the fluctuation of hedge fund positions is amplified →margincall→ VIAC, DISCA) liquidation.
4. The above stock styles overlap with the positions of the Ark, and the Ark is lying down.
The most unfortunate thing is Ark-itself, because of rising inflation expectations, Ark positions have been hit hard. The hedge fund that was killed this time was forced to flatten the "black swan", which made ARK worse-because the positions were highly overlapping and lying down. On Monday, the ARKK fund fell another 2.5%.
What is a hedge fund?
Funds that use hedging transactions are called hedge funds, also known as hedge funds or hedge funds. It refers to a financial fund that aims at profit after financial derivatives such as financial futures and financial options are combined with financial instruments. For example, Zhang San is a businessman. He saved100t rebar in his hand this year, but he can't predict the rebar price next year. what should he do ？ If the rebar price falls next year, he will definitely lose money. Zhang San had a brainwave and bought a 100 ton rebar down option in the futures market. In other words, no matter whether rebar goes up or down next year, Zhang San will not lose money. This is a traditional hedge fund, whose function is to preserve value. However, with the continuous innovation of financial derivatives market, hedge funds have participated in some very complicated financial derivatives transactions, and gradually hedge funds have become high-risk and high-return finished products. In the financial market, some fund organizations use financial derivatives to make various profit-oriented investment decisions, which are called hedge funds.
Influence of fund explosion on investors
1, it will lose money. When the fund explodes, the equity in the investor's margin account is negative, indicating that the fund will lose money when it explodes.
2. There is no remedy. When the position is short, the system will force the liquidation, the fund can't cope with the redemption, and the investor needs to bear all the losses.
But in general, the probability of fund explosion is very small. When buying funds, investors should pay attention to the historical performance and operation of funds and avoid buying funds that may explode.
If the investment fund is currently in a loss state, but there is a rebound trend in the future, then investors can consider making up their positions appropriately and increasing their investment. This applies to fund products with excellent historical performance and good management. On the other hand, if investors don't want to take high risks, it is recommended to choose low-risk funds from the beginning.
So is it possible for the fund to lose negative money? If the fund does not operate well and continues to decline, it will be liquidated after meeting some conditions, so the probability of negative losses is very low and it is basically difficult to happen. According to relevant regulations, if the net asset value of the fund is less than 50 million yuan for 60 consecutive days, it can be liquidated.
When will the fund explode?
There will be short positions, often because the fund losses are too serious. Generally speaking, it may be because the risk control of the fund is too poor, so the fund fell badly; It is also possible that the fund manager added leverage, but after adding leverage, stocks or bonds developed in the opposite direction, thus triggering short positions.
Generally speaking, Public Offering of Fund in China will not explode. However, if the asset allocation ratio exceeds 100%, that is, the fund manager leverages through bond pledge repurchase, then when the price of pledged bonds falls and some funds pledged by the fund manager suffer losses, it may cause great losses and lead to short positions.
Public Offering of Fund has strict institutional leverage restrictions on investment: the leverage ratio of open-end funds should not exceed 140%. For fixed funds, the closed period shall not exceed 200%, and the open period shall not exceed 140%.
Compared with Public Offering of Fund, private equity funds in China are more likely to break out, because the investment risk of private equity funds is higher. Especially for some equity private equity funds, when the companies they invest in are not listed, it means that private equity funds are in a state of loss, which is easy to cause short positions.
Investment skills of fund fixed investment
First, it is best to choose equity funds or configuration funds for fixed investment.
Fixed-income instruments such as bond funds are relatively unsuitable for regular fixed-income investment, because the purpose of investing in such funds is to use funds flexibly and earn fixed-income investment. It is best to invest in these funds when the market is in an upward trend, and it is most suitable to start regular fixed investment when the market is in a trough.
Second, it is best to choose a fund with large fluctuations for fixed investment.
Generally speaking, funds with large fluctuations have a better chance to accumulate more low-priced stocks in the stage of falling net value, but the market rebound can make a quick profit. The fund with stable performance fluctuates little, the relative average cost will not drop too much, and the profit is relatively limited.
Third, adjust the investment quota according to your own financial ability.
In real life, the financial situation of each person and family is different, and the total monthly investable amount of an individual or family should increase with the increase of income. Increasing the investment amount according to the financial ability can improve the investment efficiency and realize the wealth goal as soon as possible.
Four, after reaching the predetermined goal, it is necessary to adjust the investment plan.
Although it takes a long time for the fund to show the best benefits, it usually takes more than three years to see the results. However, if the preset investment target is reached in advance, then the investment plan can be adjusted. For example, regular quota can be adjusted to irregular quota. Using simple and flexible strategies can make your investment more efficient and achieve your ideal financial goals as soon as possible.