Fund return is not as simple as we think, it is influenced by many factors such as market, fund manager and human psychology!

Theoretically, the method of calculating the return of capital preservation fund is:

The return of capital preservation funds can be divided into "capital preservation return" (capital preservation and/or guaranteed dividend) and "additional potential return". There are two main ways to calculate the return, that is, adding the two or taking the higher one.

Mode 1: "addition" mode

If the fund adopts this calculation method, investors can not only get guaranteed income, but also have the opportunity to enjoy additional potential income. The advantage of this "addition" income calculation method is that the total income can be higher than the guaranteed income as long as the fund-linked market records positive growth during the whole investment period.

Mode 2: "whichever is higher" mode

The biggest difference between this calculation method and the former is that the higher of the guaranteed income and the additional potential income is taken to calculate the total income. If other factors are the same, the participation rate of capital preservation fund in this way will be slightly higher. The advantage is that if the fund-linked market records a considerable increase in the next few years, the additional potential return of such capital preservation funds will be higher. (For details, see "Comparison and Simulation Example of Two Return Calculation Methods" below. )

However, in order to accurately compare the total return of the two return calculation methods, investors should consider the actual gap between the two participation rates and their own views on the market performance throughout the investment period.

Simulation example of comparing two income calculation methods

Suppose:

The degree of principal guarantee of both is also 104%.

Only the positive growth of the market is calculated, that is, the negative growth is calculated at 0%.

The participation rate of "addition" method is15%; The participation rate of "which is higher" method is 30%.

The market performance is "addition" and "taking the highest"

-40%104%+0% x15% =104%104% or100% (100%+0% x 30

-20%104%+0% x15% =104%104% or100% (100%+0% x 30

-15%104%+0% x15% =104%104% or100% (100%.

0%104%+0% x15% =104%104% or 100% (100%+0% x 30%).

+15%104%+15% x15% =106.25%104% or104.5% (.

+20%104%+20% x15% =107%104% or106% (100%+20% x 30)

+40%104%+40% x15% =10/0/04% or10/2% (/kloc

The above examples are for reference only and do not reflect the actual situation.

How to understand the return structure of capital preservation fund?

As mentioned above, the return of capital preservation fund can be divided into two parts: "capital preservation return" and "additional potential return". Different operating modes of capital preservation funds have different factors that affect the income. To understand the return structure of capital preservation funds, we must first start with three different operating modes. (See the table below for details)

Part I: Guaranteed returns

The guaranteed income is predetermined, including the principal guarantee on the maturity date and the guaranteed dividend provided by some capital preservation funds. No matter which operation mode is adopted, the capital preservation fund needs to provide guaranteed income through fixed-rate investment, so the factors affecting this income mainly depend on the market interest rate level. The higher the interest rate, the greater the chance for the fund to provide guaranteed principal.

Part II: Additional potential returns

Capital preservation funds with different operating modes provide additional potential returns through different investment strategies.

Capital preservation funds with two modes of operation, namely "fixed interest portfolio+active management portfolio" and "interactive portfolio", are generally affected by the same factors, which all depend on the market linked to the fund and the management skills of the fund manager. Investors can make appropriate choices according to whether they have confidence in the performance of relevant markets and the management ability of fund managers during the investment period.

For the capital preservation fund with the operation mode of "fixed interest rate instrument portfolio+derivative instrument portfolio", there are many factors that affect the additional potential income through derivative investment. When making a choice, investors should not only consider which market the fund is linked to, but also pay attention to the formula that determines the market performance and the participation rate of the fund.

The income structure of three operating modes and the factors affecting the income

Fixed interest rate portfolio+

Active management

Portfolio Interactive Portfolio Fixed Interest Tool Portfolio+

Derivatives portfolio

Guaranteed return

No matter which operation mode is adopted, the guaranteed income is provided through fixed-rate investment, including the principal guarantee on the maturity date and the guaranteed dividend provided by some capital preservation funds during the investment period, so the market interest rate is the main factor affecting this income.

Additional potential return

1. Fund-linked market

2. Management skills of fund managers

1. Fund-linked market

2. Formulas that determine market performance

-How to calculate market performance

Methods of measuring market performance

3. Participation rate

Due to different operating modes, the return considerations are different. In addition to the above factors, investors also need to choose between guaranteed income and additional potential income. In the case of limited funds, if the capital preservation fund wants to improve the guaranteed income, the additional potential income will be reduced, and vice versa. Investors can choose according to their investment needs and risk tolerance.

Finally, it is worth mentioning that the calculation method of total return will also have a certain impact on the return of capital preservation funds. Among them, it can be divided into two ways, adding the guaranteed income and the additional potential income, or taking the higher of the two. The two calculation methods have different effects on the total income of the capital preservation fund.

How to understand the formula of capital preservation fund determining market performance?

Capital preservation funds that strive for additional potential returns by investing in derivatives generally multiply market performance by participation rate to calculate additional potential returns. The formula for determining market performance can start from the following two aspects:

(A) the method of calculating market performance

There are many ways for funds to calculate market performance, and the common ones are as follows: (1) the sum of positive and negative growth; (2) only calculate the positive growth; And (3) besides calculating positive growth, negative growth is also considered positive growth. Three ways to calculate market performance will affect the participation rate, and each way is also suitable for investors who have different views on the market, as follows:

Influence of market performance calculation method on participation rate

Suppose the market performance: 1 period is+50%; In the second stage, the market performance is calculated by -30%, and the calculated participation rate is suitable for investors.

1. sum of positive growth and negative growth

50%-30% = 20% optimistic about the market.

2. Only positive growth.

50%-0% = 50% slightly optimistic about the market.

3. Besides positive growth, negative growth is also positive growth.

50%+30% = 80% Low thinks the market has a good chance.

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Methods of measuring market performance

In addition to considering the calculation method of market performance, we can't ignore the methods of measuring market performance, among which "equivalence" and "average" are two common methods.

The "equivalence" method is to compare the level of the relevant market at the beginning of the establishment of the fund with the level of the maturity date. The advantage is that it can strive for the market performance throughout the investment period, but the participation rate is relatively low because of the high option price. In addition, in this way, the income is affected by the market conditions when the fund expires. If the market suddenly drops sharply, investors' income may be greatly reduced.

The "average" method is to measure the whole investment period according to a specific period, such as daily, monthly, quarterly or annual, and then calculate the average. The advantage is that the average market performance is relatively stable, the price of options involved is low, and the participation rate is increased; However, if the market continues to rise, the original increase will be reduced because the market performance is averaged.

It is worth mentioning that there are various formulas to determine market performance, and it is impossible to record them all. Before investing, investors should refer to the descriptions and simulation examples in the fund sales documents to evaluate the return potential of the fund and whether it conforms to their own views on the market prospects.

I hope I can help you solve the problem!