What are the disadvantages of index funds? Fund fixed investment business is an internationally accepted fund financing method similar to bank zero deposit and lump sum withdrawal, which is a financing method of purchasing a certain fund product at the same time interval and the same amount. So what are the related contents of the drawbacks of index funds brought by Bian Xiao today? Let's have a look!
What are the disadvantages of index funds?
Advantages:
1, high-performance transparency. As long as investors see the rise and fall of the underlying index tracked by index funds, they can generally judge the changes in the net value of the index funds they invest in and how much profit or loss they have.
2. Reduce risks by fully diversifying investment. Because index funds widely diversify their investments by tracking indexes, their portfolio returns are basically the same as the corresponding indexes. This reduces the investment risk of investors as a whole.
3. The management process is less affected by human activities. The investment management process of index funds is mainly a passive tracking process corresponding to the target index. In this way, the influence of human factors can be reduced through more programmed transactions in the management process.
Disadvantages:
1, the fluctuation is too large. For short-term operation, the risk is great. Any fund has risks, so investors should think carefully when buying it.
2. lead the rise but not resist the decline. In any market, the position of index funds is very high, and it is impossible to avoid the risk of the stock market through the operation of fund managers.
The main disadvantages of index funds are as follows:
1 index funds fluctuate greatly, which is very risky for investors who make short-term investments.
2 Index funds led the gains and resisted losses. In the market, index funds generally have higher positions. There is no way to avoid the risk of the stock market through the management of fund managers, so once the index fund plummets, it will fall a lot.
Redemption of index funds is very risky. If investors want to sell the fund in advance, they may buy high and sell low, which may easily lead to investment losses.
The fixed investment of index funds is not applicable in all cases, which requires investors to have an accurate judgment, otherwise the effect is quite different.
What are the disadvantages of index funds?
1, the redemption risk is high.
If investors want to sell the fund in advance, there may be a situation of buying high and selling low, and the difference will not be earned, resulting in the loss of funds for investors.
2, the fluctuation is not big
The fluctuation is not big, the expected income is not very high, and the income obtained by the fund's fixed investment is average income, so it is impossible to obtain excess income. Generally, if you want to expect higher returns, it is suitable for funds with large fluctuations.
3. Lead the rise but not resist the fall
Most index funds will fall to varying degrees when the stock market falls, which will also reduce investors' income. Moreover, index funds generally have high positions in the market and cannot avoid risks through fund managers, so once they fall, they will fall a lot.
How to buy index funds for fixed investment?
1, look at the fluctuation of the fund.
Choose index funds with large fluctuations to invest. When the market is in a negative situation, the fund with large fluctuation will buy more stocks than the fund with small fluctuation, so the expected return in the market will be higher.
Step 2 buy and sell
In other words, using the principle of "smile curve" to keep buying when the fund falls is equivalent to investors spending the same money to buy more fund shares. If it goes up, it will continue to sell, so that it can also take profit in time, that is, it will close the position when it is ready.
Step 3 choose the right time to buy
You can choose to trade every Thursday, because most funds fell on Thursday, and the decline was greater than the increase. At this time, the investment cost is low; If you make a fixed investment every month, you can choose the beginning, middle or end of the month.
Step 4 stick to it for a long time
The fixed investment of index funds has been restricted by funds. If the investment is too small and the time is not long, the expected return may not be obvious, and investors need to persist for a long time. The longer the time, the higher the expected income may be.
5, look at the tracking error
Tracking funds with small errors shows that the stronger the management ability of fund managers, the more they can help investors achieve their income goals.
What does the huge fund redemption mean?
The huge redemption of the fund means that the net redemption amount of the open-end fund on that day exceeds 10% of the fund size, in which the net redemption application for a single open day refers to the sum of the redemption application of the fund plus the transfer-out application of the fund when the fund is converted, and the balance after deducting the sum of the subscription application of the fund and the transfer-in application of the fund when the fund is converted.
Faced with this situation, the fund manager can postpone the remaining redemption application or accept full redemption on the premise that the proportion of redemption accepted on the same day is not less than 10% of the total fund share of the previous day, that is, when the fund manager thinks that he has the ability to pay the investor's full redemption application, he will follow the normal redemption procedure.
Investors can choose two ways: continuous redemption or cancellation of redemption. Continuous redemption means that investors choose to redeem the deferred redemption application on the next fund open day in turn.