Except for money funds, which are basically risk-free, other types of funds are more or less risky. Investors need to judge whether the fund risk is in line with their risk preference before making a choice. So how to judge the fund risk?

How to judge the risk of the fund?

1. volatility

The higher the volatility, the more intense the fund price fluctuation, which is prone to high risk and high return; The lower the volatility, the milder the fund price fluctuation, and the lower the general risk and return.

2. Maximum withdrawal rate

The maximum extraction rate refers to the maximum extraction range of yield at any historical point in the selected period when the net product value reaches the lowest point. Maximum retracement is used to describe the biggest loss that any investor may face. For example, if an investor buys a fund at 10 yuan, then the fund rises to 12 yuan, and then the fund falls to 9 yuan, then the maximum withdrawal rate of the fund is (12-9)/ 12 = 25%. If the fund wants to rise back to 12 yuan, it will rise.

3. Sharp ratio

Sharp ratio is to calculate how much excess return per unit of total risk of a portfolio will produce. If the Sharp ratio is greater than 0, it means that the average net growth rate of the fund during the measurement period exceeds the risk-free interest rate, which means that the cost performance of investment funds is better than that of bank deposits. If the Sharp ratio is less than 0, it means that the portfolio bears high risks and poor returns. The greater the Sharp ratio, the higher the return.