What are the pitfalls of annualized rate of return indicators? How should investors "effectively" choose a base?
A fund with an annual return of more than 10% actually lost money for three years?
The fund was established in 20 15 years, and achieved annual profits only in 20 15 years, 20 17 years and 20 19 years, with specific annual returns of 70%, 17% and 36% respectively. It is the high yields of 20 15 and 20 19 that push up the annualized rate of return of the fund.
According to the data, 97% of active equity funds whose annualized rate of return exceeded 10% at the end of last year and whose establishment time exceeded 10 years have lost money this year. Looking at the extended cycle, if the end of 2020 is taken as the reference point, 67% of the active equity funds whose annualized rate of return exceeds 10% at the end of 2020 and whose establishment time exceeds 10 years are still losing money.
How to correctly understand the annualized rate of return? Does this indicator reflect the future income level of fund products?
In this regard, Liu Yiqian, head of the Shanghai Securities Fund Evaluation and Research Center, bluntly said that the annualized rate of return is easily misled by investors into absolute returns. In fact, it reflects the past results and is an indicator to evaluate historical performance. As a reference for future investment, it is obviously not acceptable. "Taking the crude oil theme fund as an example, the performance in the past year was very good, and the net income directly doubled. However, the fund's performance in previous years was poor, and the annualized rate of return was still negative until this year. Past performance cannot be used as a reference for future performance. "
Many pitfalls of annual yield index
In addition, in recent years, due to the implementation of the new asset management regulations, a large number of traditional bank wealth management funds are flowing to public offerings. "The yield of bank wealth management products is basically 5 points a year, so when selling fund products, tell customers that this product has a dozen or twenty points a year, which sounds very attractive and acceptable to bank wealth management customers."
"The domestic market is ups and downs, and the performance of many products is very accidental." She said frankly, "Of course, investment itself is very difficult, but now we feel that using this indicator is a bit misleading to investors and gives a wrong judgment method, which actually becomes' more difficult' for the basic people."
First, the holder may buy at a high price. For the current public offering market, products that achieve super-high returns in a short period of time are the easiest to attract attention, but the outstanding performance of these products often depends on taking huge risks. This means that the holder is easily attracted by the product at a high position, and the product enters the downward range of performance after holding. For the holder, because of the high price, even if it is held for a long time, the rate of return is not necessarily ideal.
Second, the annualized rate of return will mask the extreme value. In fact, there is a fund in the market that can't stand too much loss, but the annualised rate of return often makes such investors fail to see the biggest loss of the products they buy in extreme cases. "When he bought this product, he probably thought that the annual income would fluctuate around the annualized rate of return displayed by the channel, and he might not realize that there would be huge losses that he could not bear." He said.
Third, the annualized rate of return cannot reflect the realization probability of annualized income. Some people will simply think that the annualized rate of return is the rate of return that can be achieved every year. For example, the annualized rate of return is 10%, which means that the annualized rate of return can guarantee to earn 10%. However, this is not the case. On the contrary, the above-mentioned products with higher annualized rate of return are likely to make profits in three years and lose money in five years.
Fourth, the annualized rate of return is not suitable for markets with short history. He believes that the statistical annualized rate of return should have a relatively long cycle, at least covering a bull-bear cycle of stock market fluctuations. But many fund managers in the A-share market have an average value.
At present, the annualized rate of return index is still the main display index of many channels because it is intuitive and easy to understand. Then, as an investor, how should we make a correct judgment and avoid many traps brought by annualized rate of return?
The FOF fund manager mentioned above believes that the benefits that a fund product can bring to investors can be divided into two parts, one is the beta of the product style itself, and the other is the alpha given by the fund manager through his own efforts. According to the current situation of A-share market, if investors have a certain professional foundation, they should identify and choose their own style and make money from Beta. However, if investors have no energy to do style appraisal for the time being, they can also choose to hand it over to a professional investment institution for configuration.
In order to earn Alpha's money, FOF fund managers believe that when choosing a fund, besides considering the annualized rate of return, at least several indicators should be considered: volatility, probability of realizing annualized return, and statistical period. In addition, you should have a basic judgment on the underlying assets of fund products, analyze the reasons why it achieves this rate of return, and see if it is sustainable in the future.
Take volatility as an example. Even if there are two fund products with similar annualized income last year, there may be huge differences in the risks behind them. "Under the same conditions, I definitely choose the one with low volatility. For investors, what needs to be considered is the risk-return ratio, which is often referred to as Sharp ratio in our industry. " He said. In addition, you can take out the annualized rate of return in recent years to see if the performance of products over the years is stable; At the same time, try to find cross-bull-bear funds to eliminate the influence of short-term market style on fund performance.
In her view, it is understandable to refer to historical achievements, but it should be considered in the frame of reference of the market environment. She believes that when investors choose funds, they must first make clear the time period counted by the annualized rate of return of fund products. Secondly, we should observe the excess returns of related products, such as taking the performance benchmark index of this product as a reference to see if the fund manager can earn alpha money on the basis of market trends. In addition, she believes that the similar ranking of funds is also an important reference indicator. "Most fund managers' bonuses are directly linked to the ranking, and the ranking basically directly reflects the ability of a fund manager and the' dehydration' performance of his management products. "
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Related question and answer: What are the 20 points of 14246? 20 points means 20%, so 20% of 14246 can be calculated by the following formula: 14246×20%=2849.2 So, 20 points of 14246 is 2849.2.