1. What is a fund safety mat? As we know, a fund refers to a certain amount of funds set up for a certain purpose and purpose. So what is a fund safety mat? In fact, fund safety mat is referred to as safety mat for short, which refers to the maximum loss limit that venture capital investment can bear. It is the amount that the current net value of the calculated portfolio exceeds the bottom line of value in the fixed proportion portfolio insurance strategy. If the safety cushion is small, it will be difficult for the fund to improve the expected return of the fund through amplification operation.
third, what is the function of the fund safety mat? In the practice of investment, a higher safety cushion not only improves the flexibility of fund operation, but also helps to enhance the security of fund's maturity and capital preservation. If the safety cushion is not enlarged, it will be fully used for risky assets investment, and even if the investment is completely lost, the fund can realize the maturity and capital preservation. Therefore, we can appropriately enlarge the multiple of the fund's safety cushion to increase the proportion of venture capital investment and increase the expected return of the fund.
for example, if twice the expected return on investment determined by investment bonds is invested in stocks, that is, the safety mat is doubled, then if the stock loss is within 5%, the fund can still achieve the goal of capital preservation. The greater the magnification of the safety cushion, the greater the potential expected return of the fund, but it also magnifies the risk. This also explains why the fund manager of the capital preservation fund always looks for an appropriate balance between the increased risk of stock investment and the increased expected return.
Editor's note: The above is all about what the fund safety mat is and what the safety mat does.