As we all know, in the world of investment, income and risk are like twin brothers. However, some investors only pursue higher returns and ignore risks when choosing funds. Therefore, when the market fluctuates, it is easy to make wrong judgments. Buffett once said: the first rule of investment is to ensure the safety of principal and never lose money; Article 2, please refer to Article 1. Investment is afraid of risks, don't be blinded by high returns, and more importantly, ensure that your principal is not lost. There is an indicator that can measure the risk fluctuation of a fund and let investors make rational judgments: the maximum withdrawal rate.

What is the highest withdrawal rate of the fund?

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 worst possible situation after purchasing a product. Maximum retracement is an important risk indicator, which is more important than volatility for hedge funds and quantitative strategy trading. For example:

Suppose the net value of the fund is 1.0000 when it was first established, and it rises to 1.5000 after a period of time, and gets a 50% return. Many people were jealous of this profit and bought it at 1.5000, but after a wave of decline, it fell to 1.2500. But for investors who entered the market from 1.5000, they lost 16.67%, and here 16.67% is the maximum withdrawal rate.

_ What's left of imitation jewelry?

Generally speaking, the lower the maximum withdrawal rate, the better. The maximum withdrawal rate is directly proportional to the risk, and the greater the maximum withdrawal rate, the greater the risk; The smaller the maximum withdrawal rate, the smaller the risk.

In addition, the maximum retracement rate can also be compared with the market index in the same period (such as the Shanghai and Shenzhen 300 Index). If the maximum withdrawal amount of a fund in the past year is 10%, and the maximum withdrawal amount of the Shanghai and Shenzhen 300 in the same period is 15%, then the fund is relatively stable and the withdrawal amount is more appropriate. On the other hand, if the maximum withdrawal rate of this fund in the past year is 25%, it means that the fund has fallen sharply relative to the broader market, with greater risks and higher withdrawal rate.

It is worth noting that some newly established funds have not passed the bear market test, and the maximum retracement may be relatively low, so we should also pay attention to the data of the same period when choosing funds.

Therefore, it is not comprehensive to measure the advantages and disadvantages of a fund only by the maximum withdrawal rate. The highest withdrawal rate of funds is influenced by market conditions and the investment philosophy of fund managers. Retreat is not terrible, what is important is whether the net worth can come back to life after retreat. Generally speaking, paying attention to the maximum withdrawal rate of funds can help investors understand the risk control ability of funds and know the maximum loss range they face. Of course, while paying attention to the maximum withdrawal rate, we should also pay attention to the moving slope of the average net value of the fund.