Seven-day annualized rate of return is the annual rate of return converted from the net income per 10,000 fund shares of the Monetary Fund in the past seven days. The daily income of money funds will change constantly with the operation of fund managers and the fluctuation of money market interest rates. In fact, it is unlikely that the fund's income will remain unchanged for one year.
Therefore, the seven-day annualized rate of return can only be regarded as a short-term indicator, which can roughly refer to the recent income level, but it cannot fully represent the actual annual income of this fund. The average annualized rate of return of domestic money funds is about 3%, while the benchmark interest rate of one-year time deposits is 1.50%. As a cash management tool with excellent liquidity and safety, money fund is still an ideal substitute for short-term savings.
The establishment of this index is mainly to provide investors with more intuitive data for investors to refer to when comparing the income of money funds with other investment products. In this indicator, the rate of return in the last seven days is determined by seven variables, so the same rate of return in the last seven days does not mean that the net income per ten thousand fund shares in the seven days used for calculation is exactly the same. Seven-day annualized rate of return is the annual rate of return converted from the net income per 10,000 fund shares of the Monetary Fund in the past seven days.
There are usually two indicators to reflect the rate of return of money market funds: one is the 7-day annualized rate of return; The second is the income per 10,000 fund units.
As a short-term indicator, the 7-day annualized rate of return is only the information of the fund's income level in the past 7 days, and does not represent the future income level. What investors really care about is the second indicator, that is, the income per 10 thousand fund shares. The higher this indicator is, the higher the actual income investors get.
According to experts' analysis, the seven-day annualized rate of return is the sum of the net income per 10,000 products in the past seven days, and then annualized. As an average index, the seven-day annualized rate of return can only reflect the general fluctuation of the past seven days. The short-term seven-day annualized rate of return of a product is extremely high, which may mean that the investment manager's operating style is more radical, and the daily income of users is often a bit like riding a roller coaster. For ordinary users, stable high income is king.
The bigger the money fund, the greater the voice in investment, and the higher the income. Some money funds use "regular products" or "self-subsidies" to express high returns, but this high return is unsustainable.
Experts believe that consumers should pay more attention to the net income per 10,000 products or the total income per 10,000 products than the annualized income of seven days. The daily income of10,000 copies is the actual income of the day; On the other hand, the 7-day annualized rate of return is to convert the 1 10,000 income in the past 7 days into an annualized rate of return, rather than the real rate of return every day. Investors should pay more attention to the stability of long-term performance when looking at product income.
In addition, investors should make comprehensive comparison when choosing products, including specific income, specific stability, specific purchase threshold, specific cash flexibility, specific use scenarios and other conditions. The quality of a product is actually a comprehensive competition.