It is not good for a fund to have a heavy position ratio that is too high.
Because the market situation for heavy positions is not good, it means that they are locked up. Pay attention to the proportion of fund holdings: many individual investors choose to invest in funds.
Among fund investments, the type with the highest returns and the highest risks is stock funds.
Stock funds are divided into passive index funds and active funds. Index funds allocate positions according to the index composition ratio, while active funds allocate positions entirely according to the preferences of the fund manager.
In stock funds, they generally focus on the proportion of the top 10 holdings, which to a large extent explains the current fund manager style and the key industries for investment.
So, are funds with high holding concentration good funds?
We use the following two examples to illustrate respectively.
Comparison of the holdings of the two funds: First, let's look at an index fund "E Fund Shanghai 50 Index Fund". The holdings announced on June 30, 2020 are shown in the figure below, including 49 stocks.
The top 10 positions accounted for 73.29%, the top 15 positions accounted for 85.08%, and the top 20 positions accounted for 91.22%. The proportion of positions is very concentrated.
Then, let’s take a look at an active fund, “Noan Growth Hybrid Fund”. The positions announced on June 30, 2020 are shown in the figure below, including 40 stocks.
The top 10 positions accounted for 81.43%, the top 15 positions accounted for 94.64%, and the top 20 positions accounted for 94.81%. The proportion of positions is also very concentrated.
The investment styles of the two funds are mainly based on the broad market. E Fund SSE 50 Fund balances value investment and growth investment, and Noon Growth Mix focuses on growth investment.
Comparison of the return rates of the two funds: We can see that the return rate of the E Fund Shanghai Stock Exchange 50 Index Fund increases as the time span increases, indicating that the return in each time period is positive growth.
As for Noah Growth Mix, the rate of return in the past three years is 60% of the rate of return in the past two years, indicating that it suffered losses in the past few years.
In fact, if you had bought at the highest point on July 14 in the second half of the year, Noah Growth Mix had lost 43% as of yesterday, while the E Fund Shanghai 50 Index had gained 2%.
Reasons for difference analysis: According to the position details in the second part, we can see that E Fund SSE 50 Index Fund includes the consumer industry, medical industry, financial industry, construction industry, transportation industry, and real estate industry.
The Noah Growth Mixed Fund has a heavy position in the manufacturing industry and is concentrated in the semiconductor industry. Only 0.27% of the funds invested in "Lingnan Shares" belong to the cultural and tourism industry, and 94% of the funds are invested in semiconductors and semiconductor-related industries.
Therefore, when the semiconductor industry is rising, Noah Growth Mix will be the best in the world and be far ahead.
Similarly, once the semiconductor industry corrects, Noah's growth mix will plummet like a bungee jump.
The Shanghai Stock Exchange 50 Index Fund disperses its investment fields across multiple industries. The east is not bright and the west is bright. There is no sudden rise or fall.
How to choose: If you are a Buddhist investment type investor, it is recommended to choose a multi-industry tepid investment such as the Shanghai Stock Exchange 50.
If you are an aggressive investor who likes to operate frequently, you can consider a fund such as Noah's Growth Mix, which can be played in a heartbeat.