What are the environmental factors for the fund’s decline? Is the fund’s decline necessarily due to operational errors?

Funds broadly refer to a certain amount of funds established for a certain purpose. The fund’s sharp decline should How to deal with it? Is the fund's decline necessarily a problem of your own operational errors? Below are the environmental factors that the editor has compiled for the fund's decline. Welcome to read.

What are the environmental factors for fund decline?

Poor market conditions: Changes in market conditions are one of the common factors for fund declines. When the overall market experiences declines, increases in volatility, or continues to be weak, the value of the Fund will also be affected.

Macroeconomic factors: Adverse changes in the economic environment, such as economic recession, inflationary pressure, rising interest rates, etc., may have a negative impact on the fund's investment targets and cause the fund to decline.

Industry risk: Unfavorable conditions in a specific industry, such as intensified industry competition, technological changes, changes in regulations and policies, etc., may expose the relevant stocks or bonds held by the fund to risk of decline.

Problems with specific investment targets: There may be problems with individual investment targets or investment strategies selected by fund managers, such as stock selection errors, blind following, improper investment timing, etc., resulting in fund declines.

Global or regional events: Unpredictable events such as wars, natural disasters, and social unrest may have an impact on the market and fund operations, causing the fund to fall.

Is the fund’s decline necessarily due to its own operational errors?

The fund’s decline is not necessarily due to the fund’s own operational errors. Market risks and other external environmental factors may have an impact on the Fund. Fund managers’ investment decisions are based on analysis and judgment of the market and individual investment targets. Although they strive to avoid mistakes, they cannot predict and control all risks. When investing in funds, investors must understand the risk characteristics of the fund and make investment decisions based on their own risk tolerance.

Reasons for fund crash

1. Affected by market conditions

Most stock funds invest in stocks, so when the stock market crashes At that time, the possibility of the fund falling sharply is very high, so when buying a fund, you can check which stocks the fund mainly holds, and then see whether the invested stocks have future prospects.

2. Valuation is too high

Generally, when a fund continues to rise for a period of time and the fund valuation is very high, the possibility of a fall is relatively high. , because the fund valuation estimates the fund's assets and liabilities based on a certain price. If the fund's valuation is too high, the risk will be greater, and the possibility of the fund falling sharply is relatively high.

3. Encountering emergencies with a greater impact

The investment of the fund is dependent on entering the market. If there is a greater impact of emergencies on the financial market, then it will also It will directly affect the fund. For example, the financial market will cause the stock market to fall significantly, thus affecting the fund.

When a fund falls sharply, it is necessary to judge whether there is a possibility of the fund rising in the future. If you are optimistic and feel that there is a possibility of rising, you can actually use fixed investment in the fund to diversify. It is risky, and then hold it for a long time, waiting for the fund to rise before selling it to make money.

Can funds still be bought now?

First of all, if the fund falls sharply due to the first reason, whether the fund can buy it depends mainly on whether the stocks allocated by these funds It has fallen to a reasonable valuation area.

For stocks that can be bought by funds in a group, the listed companies behind them will definitely not be too bad, and may even be the best in various industries. These companies have low risk of failure and large room for growth, so there is no problem in holding their stocks for the long term.

The only question is whether the current stock valuation is favorable. Because the premise has been hyped too high, although it has fallen a lot, it may not have fallen to a reasonable valuation area. But if it has reached a reasonable valuation area, funds holding these stocks can buy it.

Of course, even if these stocks have not fallen to a reasonable valuation area, if you buy funds allocated to these stocks now, as long as you hold them long enough, you will still have the opportunity to make money. Because the valuation of stocks will continue to change with the growth of the company, as long as the company continues to grow in the future, the current high valuation may appear relatively low in the future.

What are the ways to deal with the sharp fall of funds?

1. The profitable funds should reduce their positions first. The actual situation is not as bad as we imagined. Although the market fell sharply, it still rose. fund. For example, technology, technology rose sharply yesterday, and the technology fund held by a friend happened to have a profit of about 50%. At this time, the technology fund can be reduced first. The reduced position...

2. Buy some funds with small drawdowns to avoid risks. Which fund is more stable at this time? It must be fixed income + and bond funds. Although the return is only 5%-10%

3. Loss is an important lesson in investment, and you need to learn to face it with the correct mentality.

Indeed, everyone likes to make money, and no one likes to lose money. Especially when there is a big retracement, everyone will feel tight in the chest and "blue skinny mushrooms". The core reason behind this is human nature's "loss aversion", that is, the pain caused by a 20% retracement far exceeds the happiness brought by a 20% gain.

But the fact that needs to be recognized is that losses in investment are inevitable, just like winter and night every day. Therefore, "Don't come here at the peak, and don't turn away at the trough."