First of all, the two strategies pursue different goals.
The "absolute return" pursues the "security" of the fund, that is, no matter whether the market goes up or down, the fund manager should try his best to reduce the risk and strive for the positive return of the fund. To put it bluntly, it means "I would rather earn less than lose", and the pursuit is the word "stability".
And "relative income" refers to the income compared with the broader market, that is, when the broader market rises, it should strive for a greater increase than the broader market, and when the broader market falls, it should strive for a smaller decline than the broader market. For example, in a certain period of time, the market rises by 5% and the fund rises by 15%, then the relative return of the fund is10%; Of course, the return will not always be positive. Assuming that the market fell by 15% and the fund fell by 5%, although the return was negative, the fund still outperformed the market and gained the "relative return" of 10%, which can be said to be the investment goal.
Second, the two strategies are suitable for different people.
In fact, there is no difference between "absolute return" and "relative return", mainly because the suitable investors are different.
"Absolute return" is to pursue the positive return of the fund regardless of market ups and downs, which is more suitable for investors who are cautious about the development of the market outlook; The goal of "relative income" is to surpass the market increase and is more suitable for investors with high risk tolerance and optimistic about the market outlook.
The so-called "absolute return" means paying attention to safety in investment and pursuing "positive" return. No matter whether the market goes up or down, the helm of the absolute return fund aims at obtaining "positive" returns, and ensures the positive returns of the fund by controlling risks, preferring to earn less and not lose money.
1. In product promotion, such funds generally declare that they pursue absolute returns, so you may wish to pay attention to it.
2. Look at the performance benchmark. Absolute income funds usually use fixed rate of return as the benchmark for performance comparison. For example, the performance benchmark of an absolute income hybrid fund established earlier is "one-year bank time deposit rate in the same period".
3. In terms of investment strategy, in order to obtain positive returns, absolute income funds may adopt fixed income plus, hedging strategy and hedging. Reduce risk and control exit.
If the absolute return is "compared with yourself", then the relative return is "compared with others". Relative income funds are generally compared with market representative indexes such as Shanghai Composite Index and Shanghai-Shenzhen 300 Index: when the index rises, it strives to surpass the index increase; When the index falls, we should also control the retracement and strive to be more flexible than the index.
Faced with these two kinds of income, how should investors choose? In fact, the two strategies of absolute return and relative return only pursue different investment goals, and there is no difference between them. For investors, there is only the difference between suitable and unsuitable.
Absolute returns are suitable for investors who are unwilling to take greater risks and pursue positive returns. In the shock and bear market, absolute income fund is a good safe-haven investment choice, with small fluctuation, stable income and investors' confidence. However, in the bull market, such products are also difficult to keep up with the market rhythm because of their stability. Compared with income-oriented funds, the flexibility is small and the income may be low.
Relative return is more suitable for investors who are willing to take certain risks and pursue high returns. In the bull market, such funds strive to outperform the index, which is more offensive and has better returns than absolute income funds. On the other hand, in a bear market or a volatile market, because the relative income fund can tolerate losses, the investment income may also be negative. If the risk preference of investors is low, the investment experience may be poor.
In short, investors need not worry about the advantages and disadvantages of "absolute" and "relative". They might as well make clear their risk tolerance and investment objectives, and choose appropriate strategies and products according to their actual situation.