The fund's performance comparison benchmark consists of an appropriate fund portfolio, just like the "passing line", which is an expected goal that the fund company sets for the fund that it wants to achieve and is likely to achieve.

Investors can measure fund performance through the difference between the fund's return rate and the fund's performance comparison benchmark.

Generally speaking, when the market is improving, by comparing the net value growth rate with its performance over the same period compared to the benchmark return, we can see whether the fund's performance beats the benchmark and obtains excess returns.

When the market falls, as long as the decline in the net value growth rate is less than the decline in the return rate of its performance comparison benchmark during the same period, it can mean that the fund's investment operation to resist risks is effective.

How is the performance comparison benchmark for fund income set?

Different funds have different performance comparison benchmarks.

Generally speaking, the performance comparison benchmarks of bond funds and money funds will be linked to certain bond indexes or demand deposit interest rates, such as the seven-day notice after-tax deposit interest rate for the same period.

The performance comparison benchmarks of these two funds generally consist of a single index or interest rate, which is relatively simple.

The performance comparison benchmark of equity funds such as stock funds and hybrid funds is usually a composite of a stock index and a bond index.

For example: CSI 800 Index*60%+ChinaBond New Composite Index*40%.

The performance comparison benchmarks of equity funds are mostly composed of multiple indexes and are relatively complex.

What information does the performance comparison benchmark of equity funds reveal?

1. Fund type, investment scope and asset allocation ratio.

When designing products, fund companies usually combine factors such as the fund's type, investment scope, and asset allocation ratio, and use the composite index of commonly used benchmarks in the market as the fund's own performance comparison benchmark.

2. The investment style of the fund.

Theoretically, the performance comparison benchmark is a quantitative reflection of the fund's style, so the performance comparison benchmark can help investors judge the fund's investment style.

This is mainly achieved by observing the reference index selected by the benchmark.

Generally speaking, funds that mainly invest in small and mid-cap stocks will generally use the small and mid-cap index as one of the components of the performance comparison benchmark.

Funds that mainly invest in large-cap blue chips mostly use the CSI 300 Index as one of the components of their performance comparison benchmark.

3. The ability of the fund’s management team.

Different funds will have correspondingly different systemic risks due to factors such as investment scope, style characteristics, asset allocation ratio, etc.

The ability of a fund management team cannot be judged simply by whether it outperforms the market.

The performance comparison benchmark can help investors understand the relationship between the fund and the corresponding systemic risk, and objectively evaluate the ability of the fund's management team.

Generally speaking, if the return of a fund is better than the performance of its performance comparison benchmark in a certain period, then regardless of whether it has achieved absolute returns or surpassed its peers, it should be said that the fund manager's management operation of the fund

It is qualified, otherwise it is unqualified.