How to choose fund investment strategy?
Investors can choose the fund investment strategy according to their risk preference, investment period and capital scale. Common fund investment strategies include growth investment strategy, value investment strategy and index investment strategy. Growth funds mainly invests in companies with high growth potential, and usually looks for investment opportunities in emerging industries or high-tech industries. This kind of fund pursues high returns, but it is also accompanied by high risks. Value funds mainly invest in undervalued companies, usually looking for investment opportunities under relatively low P/E ratio, P/B ratio and other indicators. This kind of fund pursues low valuation investment and pays attention to value regression, but it may take a long investment cycle. Index funds track the performance of specific market indexes without active stock selection and timing operation, with low transaction cost and high transparency. This kind of fund is suitable for tracking the market for a long time, not for investors who pursue excess returns.
What's the difference between active funds and passive funds?
Active fund and passive fund are two different types of funds, which are different in portfolio management, investment objectives and cost structure. The management team of active fund chooses and manages the investment portfolio through active investment decision-making, for example, pursuing excess returns through strategies such as stock selection and timing. Passive funds, on the other hand, copy the portfolio of the market index, do not take active stock selection or timing operation, but only track the performance of the market index, and the change of their portfolio is only due to the change of the index. The investment goal of active funds is usually to pursue more than the average performance of the market, that is, to outperform the market index and obtain excess returns. The goal of passive fund is to track the performance of market index and obtain the average rate of return in the market. Active funds usually have higher management costs and transaction costs, because professional fund managers need to be hired with high salaries, and active trading will also generate more transaction costs. Passive funds usually have lower management costs and transaction costs because their investment strategies are relatively simple.