Overvaluation refers to the part of the fund that is higher than the historical overall valuation by 70% (inclusive). If the fund valuation is in the 30%-70% (excluding) percentile of the overall historical valuation, it is regarded as the normal valuation range; If the fund valuation is lower than 30% (inclusive) of the overall historical valuation, the lower part is regarded as the low valuation range.

The historical overall valuation range means that the fund valuation will be updated according to market changes from the date of fund issuance. Valuation is an important basic indicator to measure the value of the fund, which is for reference only. Buying a fund in an undervalued area is not necessarily profitable, and buying a fund in an overvalued area is not necessarily a loss.

To judge whether a fund has potential, we can start from the following dimensions:

First, historical performance. Short-term performance and three-year performance can be judged together. A good fund's long-term net value fluctuates less, making money in a bull market and losing less in a bear market.

Second, the comprehensive strength of fund companies. Under normal circumstances, the overall performance advantages of fund companies with excellent investment and research strength will be more obvious.

Third, the size of the fund. Moderate fund size is more suitable for fund manager management, too small is difficult to fully disperse risks, too large will reduce flexibility.

Fourth, the quantitative indicators of applied majors. For example: Sharp ratio, maximum retracement, attribution analysis, etc. , you can get some more objective judgments.