To determine whether a fund is overvalued or undervalued, it should be discussed on a case-by-case basis.

Active funds cannot be judged simply because positions may be adjusted at any time: for active funds with obvious industry sector characteristics, you can use the valuation of the corresponding sector as a reference; for active funds with unclear industry sector characteristics, it is actually impossible to value.

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Passive funds (often also called index funds) can be judged based on the industry's price-to-earnings ratio and price-to-book ratio.

Below I will give you a detailed explanation of how to view these data indicators!

P/E is the price-to-earnings ratio, which is the ratio of market capitalization to earnings.

Market capitalization can be understood as the value of the fund you hold in the current market. To further explain, the price-to-earnings ratio is the value of funds that investors need to invest to obtain profit per unit.

So the lower the P/E ratio, the more money you make investing the same money, and the more undervalued the fund is.

P/B is the price-to-book ratio, which is the ratio of market capitalization to net assets.

Like the P/E ratio, the lower the P/B ratio of a fund, the more undervalued it is.

Because the algorithm for fund valuation is relatively complex, ordinary investors can directly go to Egg Roll Valuation or Qieman Valuation website to see the latest index fund valuation.

These two websites have the latest index rankings, and you can intuitively see the PE, PB, ROE and other data of index funds, which is of reference value for fund novices and professionals.

In addition to the website providing data on which index funds have lower valuations and which index funds have higher valuations as a reference.

If you want to know whether a fund is overvalued or undervalued, there is the simplest way to judge: you can look at where the current fund valuation is compared with historical valuations. If the current fund valuation is lower than the valuation for most of history,

Then the fund is undervalued, and if it is higher than its valuation for most of history, then the fund is overvalued.

The historical valuation percentile generally uses 30% as the cut-off point, and the lower the better.

For example, the current valuation of the CSI 300 is lower than 10.6% of the past time, so its value is overvalued.

The current valuation of CSI Dividend is lower than 73.32% of the time in the past, and its value is undervalued.

The data provided by different platforms may vary slightly, but are generally consistent.

In addition, you can also go to the official website of CSI or SSE for the most authoritative first-hand information.

If the PE, PB and valuation historical percentiles of an index fund are all low, and the ROE data is high, then it is an undervalued fund and you can consider buying it.