Funds are also a common way to manage money, but buying and selling funds certainly requires certain skills, so when can the funds be sold? What will happen to the fund operation? The following is analyzed by Bian Xiao.
What will happen to the fund operation?
Leverage operation risk: some funds use leverage operation means, that is, borrowing funds to invest. If the borrowed funds fail to be invested or the market fluctuates greatly, it will lead to debt repayment difficulties, which will lead to the risk of short positions.
Centralized investment risk: the fund is too focused on investing in a certain industry, a certain region or a certain type of assets. If there is a major risk in this industry or region or the value of assets falls sharply, the net value of the fund will fall sharply, which will lead to short positions.
Market liquidity risk: When there are serious liquidity problems in the market, such as market transactions are stagnant, the scale of market transactions is sharply reduced or the assets held cannot be sold quickly, the fund may not be realized in time or at a low price, resulting in short positions.
Improper management of fund scale: If the fund scale is not properly managed, there will be problems in strategy implementation, resulting in improper fund allocation, wrong investment decision or unpredictable market changes. , which may lead to the risk of capital explosion.
What is the principle of fund covering positions?
Timely jiacang: when the market trend is upward or at a certain time, the fund manager will increase the allocation ratio of assets in time to further gain income.
Asset adjustment: Fund managers can adjust the asset allocation of funds according to market trends and investment performance. Even if the value of some assets falls, the effect of covering positions can be achieved by adjusting other assets with value-added potential.
Cash management: fund managers can increase the proportion of funds held, convert a certain proportion of funds into cash, and wait for a better opportunity in the market.
Diversified investment: Fund managers can choose different types of assets for allocation through diversified investment, thus reducing the risk of a specific single asset.
What should I pay attention to when buying funds?
Investment objectives and risk tolerance: ensure that the selected fund is consistent with its own investment objectives and risk tolerance. Understand your investment objectives, investment duration and risk preference, and choose the fund type and strategy that suits you.
Historical performance and performance of the fund: evaluate the historical performance and performance of the fund, including annualized rate of return, risk-adjusted rate of return and relative performance. Focus on the performance of funds in different market environments, as well as the investment ability and experience of fund managers.
Fund fee and fee structure: Understand the fee structure of the fund, including management fee, custody fee and sales service fee. Fees will have an impact on investment income, so we should choose a fund with reasonable and transparent fees.
Scale and liquidity of the fund: Pay attention to the scale and liquidity of the fund. Larger funds may face liquidity risks in their operation, while smaller funds may have scale restrictions.
Risk warning and disclosure of the fund: read the risk warning and fund contract of the fund carefully to understand the risk characteristics and risk management measures of the fund. Understand the market risk, credit risk and liquidity risk that the fund may face.
Reputation and management ability of fund management companies and fund managers: understand the background, experience and performance of fund management companies and fund managers, and evaluate their ability and level of fund management.
Is it risky to buy a fund?
Market risk: the net value of the fund will be affected by market fluctuations, which may lead to the loss of investment principal and income.
Liquidity risk: some assets invested by funds may face the risk of insufficient liquidity, resulting in the inability to buy and sell fund shares in time.
Credit risk: The assets such as bonds invested by the Fund are at risk of default by the debtor, which may cause the Fund to suffer losses.
Why can fund trading make money?
The reason why fund trading can make money is because the fund's investment portfolio has made a return in the market. Fund managers use investors' funds to buy a basket of stocks, bonds, indexes and other assets, and create income for investors through the appreciation or dividends of these assets. When the asset price in the fund portfolio rises, the net value of the fund will also rise, and investors can make a profit by selling the fund shares.
However, fund trading is risky and investors may not always make money. The income of the fund is influenced by market factors, investment decision-making and execution ability of fund managers, asset allocation and dispersion and other factors. If the market falls or the fund's portfolio does not perform well, investors may suffer losses.