What do you know about the legendary absolute income fund?

For risk-averse investors, the "roller coaster" stock market has greatly increased the difficulty of investment. So is there a fund product that is likely to slow down the fluctuation brought by the volatile market for us novices? Xiaobian has compiled the absolute income fund here. How much do you know for your reference? I hope everyone will gain something in the reading process!

The absolute return strategy may bring investors a better holding experience under certain circumstances, and there is no need to worry about the fluctuation of the capital market. Absolute income funds strive for "winning in stability", emphasize the pursuit of safety and certainty, and avoid losses as much as possible. They are a kind of products with stable income and low risk.

what is an absolute return fund?

first of all, we should distinguish between absolute income and relative income.

absolute return is not compared with an asset price index, but with a fixed return value, which pursues the word stability.

relative income generally refers to the income that exceeds the performance benchmark, and the pursuit is much higher and less than the benchmark.

Absolute income fund is a kind of fund that adopts "absolute income strategy" for investment. That is, a product that aims at pursuing absolute returns, strives for a gentle upward trend of the net value curve on the basis of strictly controlling portfolio withdrawal and fluctuation, and helps the holder realize "positive" returns.

It should be emphasized that absolute return funds do not mean "positive returns" every day, but more attention is paid to risk control in fund operation, and short-term losses are also possible. However, in the long run, the fluctuation of the fund is small, and the probability of positive income is high. Finally, through the continuous increase of "positive income", we witness the magical compound interest effect.

Absolute income funds mainly adopt market-neutral strategy, regardless of the direction of investment, but use hedging and other means to make long positions and short positions in the portfolio meet multi-dimensional constraints, so that the portfolio as a whole does not bear market systemic risks.

Therefore, the trend of this kind of fund is not outstanding in the bull market, and the income gap between this kind of fund and bond fund is not big, but the advantages of absolute income fund are shown in the volatile market and unilateral downward market. The goal of absolute income fund is to strictly control risks and continuously obtain positive returns. Different from relative income funds, absolute income funds do not seek to surpass performance benchmarks and similar products. The comparison benchmark is generally a fixed income target (such as one-year fixed interest rate), which emphasizes safety and certainty and avoids losses as much as possible.

Therefore, when stock market volatility intensifies and uncertainty increases, you can consider buying absolute return funds. For investors who have hedging needs and low tolerance for retracement, but want to obtain relatively reasonable and stable returns, the allocation value of absolute income funds is more significant.

how is the "absolute return" realized?

At present, there are two investment strategies to realize absolute returns in the market: "fixed income plus" and "hedging". Due to the restriction of stock index futures market capacity, there are not many funds adopting hedging strategy at present. Comparatively speaking, the "fixed income plus" strategy is more mainstream and the products are more abundant.

1. "fixed income+"strategy

The essence of "fixed income+"strategy is to mainly buy safe assets to provide basic income, and moderately buy high-risk products to enhance income. Specifically, there are fixed income+stocks, fixed income+convertible bonds, fixed income+innovation and other strategies.

the advantages of "fixed income plus" products can be summarized in four words: both offensive and defensive. As the interest rate is lowered, the yield of the money fund is also falling. For example, the interest rate of Yu 'ebao falls below 2%. "Fixed income+"products are favored by the market with lower risks and higher returns.

the "fixed income" part is like a shield, which reduces the product risk and plays the role of supporting the bottom, while "+"is like a sword, which can obtain higher returns with high-quality risk assets. The secondary bond funds, partial debt mixed funds and enhanced bond funds we often hear are all products of "fixed income plus".

2. Hedging strategy

"Hedging" strategy products hedge the influence of the market by buying stocks, shorting options or futures at the same time to obtain Alpha income. The so-called Alpha income is simply the income that has nothing to do with the performance of the market and is not affected by the rise and fall of the market.

maybe some friends will ask, won't the gains offset each other while shorting? Although the fluctuation has decreased, then I finally bought a "lonely"?

how to understand this long-short strategy? For example, an absolute income fund can hold short futures contracts with the Shanghai and Shenzhen 3 Index as the target, and at the same time allocate optimistic Shanghai and Shenzhen 3 constituent stocks and low optimistic constituent stocks among its heavyweight stocks. If the Shanghai and Shenzhen 3 Index falls, the constituent stocks of the Shanghai and Shenzhen 3 Index matched by this fund will outperform the index, which will bring excess returns; The low allocation of the Shanghai and Shenzhen 3 index component stocks underperforming the index can also contribute to excess returns.

that is to say, although you spend some money, it reduces your potential income, but it also helps you avoid risks and bear large losses.

which investors are suitable for?

China people's long-term savings habits make everyone's financial management concept still stay at the level of "guaranteeing capital and paying interest". Traditional bank financing is still very popular with investors because of its guaranteed principal and predictable income, although the rate of return is not very high.

However, since the new asset management regulations, bank wealth management has broken the rigid redemption and transformed into a net worth product, and the yield has also been declining, which has greatly reduced the attractiveness of investment. Another major investment product favored by low-risk investors-money fund, the annualized rate of return on the 7th also continued to decline. The demand for steady financial management of trillions of funds in the market seems to be getting stronger and stronger.

in this context, absolute income fund can be said to be the public offering product closest to the financial needs of ordinary people.

although it is also a net-worth product, it does not guarantee the principal and the income, but the excellent absolute income products can basically achieve the effect of "obtaining absolute income" after a long time. Absolute income fund is an ideal choice for both conservative investors who are looking for financial alternatives and investors who have the need to hedge their funds under volatile market conditions.

more crucially, in the current market environment with significant uncertainty, buying absolute return funds one day earlier may be a "life-saving" day. Whether you are a rational investor who pays attention to asset allocation or an investor who needs to hedge in the near future, you can take out some funds to buy products with stable income such as China Post's absolute income strategy, and suppress yourself.

Of course, you can also allocate idle funds to the absolute income fund for a long time, and get a much higher rate of return than the money fund under the premise of relatively controllable risks.

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