Fund valuation is to value the assets and liabilities of the fund at a certain price. When the fund is overvalued, it shows that the fund has a bubble and the investment risk is high. The low valuation of the fund shows that the fund has investment value and high profit probability.

Funds can learn from stock market valuation. The stock market judges the stock valuation according to the price-earnings ratio. Similarly, investors can use historical P/E ratio to judge fund valuation. When the P/E ratio of the fund is lower than the historical P/E ratio, it means that the fund is at a low valuation. When the P/E ratio of the fund is higher than the historical P/E ratio, it means that the fund is at a high valuation.