1. "Retracement" refers to the maximum amplitude from the peak to the bottom of the fund's net value curve. This indicator tests the fund manager's ability to grasp risks and trends.

2. In terms of capital profit-loss ratio, it is not enough to just look at the capital return rate, but also the capital drawdown rate. If the capital return rate is 85% and the drawdown rate is 10%, then the return Ratio with drawdown: capital yield/fund drawdown rate = 8.5. The ratio is ideal. The larger the ratio, the stronger the profitability of the person.

Factors affecting drawdowns:

1. There are three main ways for private equity fund managers to control drawdowns: stock selection, hedging and position control. Choosing stocks with a margin of safety is the first priority in controlling drawdowns. A-share retail investors account for a large proportion, and the overall market sentiment fluctuates violently. Any concept or theme, whether true or false, as long as it is new and dazzling enough, can cause huge speculation in the short term, but it is often followed by a sharp fall. The game of drumming and passing flowers is undoubtedly a disaster for investors who are not quick with their hands and feet. Therefore, institutions such as Danshui Quan and Gao Yi advocate reverse investment, pay attention to the margin of safety, conduct in-depth research and buy ginseng at "radish prices", thus avoiding the panic that is almost inevitable after the drumbeat stops.

2. When fund managers firmly believe in the value of the stocks they hold, once faced with systemic risks, using stock index futures for hedging is almost the best way to control risks. During the stock market crash, various types of stocks gathered together, and the use of stock index futures was restricted. Position control became the last valve to control the drawdown.

3. The large retracement of the net value of private equity funds cannot be entirely attributed to problems in the risk control system. In extremely harsh markets, private equity funds that select individual stocks suffer more. They will not Like trend-oriented fund managers, they add or reduce positions according to the rise and fall of the market, so that the net worth will temporarily fall sharply. However, after a decline, the fund's ability to rebound, that is, whether the stocks selected by the fund manager were wrongly sold or have poor fundamentals, determines the future fate of the fund. Although for private equity funds that select individual stocks, a large net value retracement is a flaw, but it is not a fatal flaw. The real fatal injury is enduring the large retracement of selected stocks, but not enjoying the large gains of selected stocks.