The maximum withdrawal rate also represents the biggest possible loss when we invest in the fund. (Of course, historical data does not represent the future, and it is entirely possible that there will be a bigger retracement in the future, but the historical maximum retracement rate is still a very important indicator that we can refer to when choosing funds. In other words, if we accidentally buy the highest point, how much money the fund may make us lose, that is, the worst possible situation for investment funds.
Investment advice:
The lower the highest withdrawal rate of actively managed funds, the better our investment experience will be. The lower the maximum withdrawal rate, it also means that whenever I invest in this fund, the lower the probability of losing money. It is not easy for a general fund manager to control the exit. When we choose funds, we should try to choose those funds with small withdrawal rate to invest.
Sharp ratio indicates how much excess return a portfolio will generate for each unit of risk it undertakes. For example, if the Sharp ratio of a product is 2, it means that for every increase of 1% of the risk taken by investors, they will get 2% extra income. If the risk of 1% is increased, products with higher Sharp ratio may bring higher excess returns.
Investment advice:
Sharp ratio needs to be compared according to the same type of fund.
The volatility of fund refers to the measurement of the change degree of fund investment return. The rate of change is the rate of return, calculated as a percentage. For example, a fund with a face value of 1 yuan has risen to 1.03 yuan, which is a yield of 3%. The higher the rate of return, the better. However, the greater the change, the greater the risk. Because equity funds are fund varieties with relatively large returns and risks, they generally change greatly. Aggressive investors can choose high-risk and high-yield equity funds. However, more stable investors still choose hybrid funds with flexible operation, stable trend, moderate income and less risk. If there are many funds, it is best to choose a combination of different fund varieties for investment or fixed investment. This can maximize the diversification of investment risks and obtain higher returns.
Whether the fund volatility is good or small cannot be generalized. Generally speaking, the fund's volatility is measured by a certain period of time, such as several years, and it is meaningful to compare the same period of time.
Investment advice:
It needs to be compared according to the same type of funds: for example, two bond funds with similar expected returns compare their fund volatility in the past year. The greater the volatility, the greater the risk, and investors can choose funds with relatively small volatility.