Part of the reason why investors are afraid of the fund's net value is that they are worried that the stock price will rise too fast and too high.
However, the net fund value and stock price are different mechanisms.
The formation of stock price is mainly determined by trading behavior. Because of the rapid increase in incremental capital purchases, investors began to sell stocks, and the stock price reversal began to fall rapidly.
From the formation mechanism of fund net value, the essence of fund performance is determined by the price performance of the underlying assets invested by the fund.
Investors buying and selling funds lead to changes in fund shares. Under normal circumstances, unless there are special circumstances such as huge redemption, it will not have much impact on the net value of the fund. The source of long-term growth of fund net value is the value growth of assets such as stocks and bonds invested by fund managers.
Even if the current fund net value has reached a new high, whether the fund net value will continue to grow in the future is not directly related to the current situation.
Is there little room for high net worth funds to rise?
Judging from the influence mechanism of fund net value change, high net worth funds may still obtain excellent returns in the future. As mentioned above, the driving force for the growth of the fund's net value is the appreciation of the value of the assets invested by the fund.
The level of fund net value can directly affect the fund share that knowledge investors can buy. Under the same fund size, they can buy more low-net-worth fund shares.
When considering whether to buy a fund, we don't need to analyze the net value of the fund too much, but should pay attention to the internal factors and driving forces of the change of the net value of the fund.