1. 7-day annualized rate of return
Seven-day annualized rate of return is the annual rate of return converted from the net income per 10,000 fund shares of the Monetary Fund in the past seven days. The daily income of money funds will change constantly with the operation of fund managers and the fluctuation of money market interest rates. In fact, it is unlikely that the fund's income will remain unchanged for one year.
Income calculation formula: 7-day annualized rate of return = 7-day total rate of return (%)/ 7 x 365.
For example, a money fund has been earning 0.07% for the past seven days, so the average daily return for these seven days is 0.0 1% (that is, one ten thousandth), and the annualized return for seven days is 3.65%(0.07%/7x365).
As an intuitive income indicator, the seven-day annualized rate of return is an important indicator for investors to choose investment funds. Usually, financial products such as deposit interest rate, wealth management products and reverse repurchase are also priced at annualized rate of return. 、
Second, the annual interest rate
The annual interest rate refers to the deposit interest rate for one year. The so-called interest rate is the abbreviation of "interest rate", which refers to the ratio of interest amount to deposit principal or loan principal in a certain period of time. Usually divided into annual interest rate, monthly interest rate and daily interest rate. The annual interest rate is expressed as a percentage of the principal, the monthly interest rate as a percentage, and the daily interest rate as a percentage.
Income calculation formula: annual interest rate = one-year interest ÷ principal × 100%.
For example: deposit 100 yuan,
The bank promised to pay an annual interest rate of 4.2%
Then the bank will pay 4.2 yuan interest next year.
The calculation formula is 100×4.2% = 4.2 yuan.
So as long as it is converted according to the calculation formula, it can be understood as the conversion of seven-day annualization and annual interest rate.
The annual interest rate refers to the deposit interest rate for one year. The so-called interest rate is the abbreviation of "interest rate", which refers to the ratio of interest amount to deposit principal or loan principal in a certain period of time. Usually divided into annual interest rate, monthly interest rate and daily interest rate. The annual interest rate is expressed as a percentage of the principal, the monthly interest rate as a percentage, and the daily interest rate as a percentage.
When the economic development is in the growth stage, the investment opportunities of banks increase, the demand in loanable funds increases and the interest rate rises; On the other hand, when the economy is in a downturn and the society is in a depression, banks' willingness to invest will decrease, so will the demand for loanable funds, and the market interest rate will generally be lower.
Definition:
Therefore, the seven-day annualized rate of return can only be regarded as a short-term indicator, which can roughly refer to the recent income level, but it cannot fully represent the actual annual income of this fund.
The average annualized rate of return of domestic money funds is about 3%, while the benchmark interest rate of one-year time deposits is 1.50%. As a cash management tool with excellent liquidity and safety, money fund is still an ideal substitute for short-term savings.
The establishment of this index is mainly to provide investors with more intuitive data for investors to refer to when comparing the income of money funds with other investment products. In this indicator, the rate of return in the last seven days is determined by seven variables, so the same income in the last seven days does not mean that the net income per 10,000 fund shares in the seven times used for calculation is exactly the same.
Seven-day annualized rate of return is the annual rate of return converted from the net income per 10,000 fund shares of the Monetary Fund in the past seven days.
High and low indicator:
There are usually two indicators to reflect the rate of return of money market funds: one is the 7-day annualized rate of return; The second is the income per 10,000 fund units.
As a short-term indicator, the 7-day annualized rate of return is only the information of the fund's income level in the past 7 days, and does not represent the future income level. What investors really care about is the second indicator, that is, the income per 10 thousand fund shares. The higher this indicator is, the higher the actual income investors get.