Because each fund manager's investment style is different, their retreat is different. Some fund managers are good at grasping the market environment and macro-timing, and will adjust their positions in time to avoid a sharp decline in net worth and control it within a relatively small decline. From the perspective of fund net value, risk control ability is the ability to ensure the steady increase of portfolio net value.
Some fund managers select stocks, and will not increase or decrease positions frequently according to the market ups and downs, so that the net value will temporarily drop sharply. However, after the decline, the resilience of the fund, that is, whether the stock selected by the fund manager is wrongly killed or the fundamentals are poor, determines the future fate of the fund. For them, volatility is not a risk, but choosing the wrong stock is the real risk.
Generally speaking, some fund managers are good at stock selection and can make subjective screening. Some are good at quantitative sea selection, and they can also choose quantitative stock selection. There are many ways to hedge, such as partial hedging, complete hedging, industry neutrality, shorting individual stocks or not hedging.
However, because it is for investors to manage money, the net withdrawal should be controlled within a relatively reasonable range. Mature fund managers will respond to the market environment and stock valuation in time, so as to control the fluctuation of net worth within a reasonable range.
In fact, buying a fund is to choose a fund manager to see if you agree with his investment philosophy. How to choose depends on the performance of fund managers in the past few years. If he does well in 2-3 years, he will be able to reduce contingency slightly and show his true strength.
On the other hand, in the face of fund net value fluctuations, investors do not need to "sell high and suck low" frequently. Statistics show that the probability of stepping on the rhythm every time is not high, which is easy to backfire. And there will be additional subscription and redemption costs. Holding funds with good performance for a long time can get better returns. The continuous sharp rise in net worth is not the normal state of investment. After a period of sharp rise and consolidation, we can go more steadily and further.
This also requires that the investment funds are basically self-owned funds that are not needed in daily life, so as to withstand certain fluctuations. The withdrawal of market value is not a real risk, but a permanent loss of capital, which does not exist when it is undervalued.
If your favorite fund starts to decline within a period of time, investors can divide the funds on hand into several equal parts, and buy one for each decline (for example, 2%) to dilute the cost and expand the position. In this way, when the fund picks up, it can harvest more surprises.
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