First, the product with the least volatility is the first choice.
Income fluctuation is a measure of the range of income change. The greater the fluctuation of income, the greater the risk the fund bears.
Don't blindly chase the product with the highest yield, because when the market falls, perhaps this fund with the highest yield will tend to fall at a faster speed, and the decline may be far greater than its performance benchmark. If investors invest in this fund, they will take higher risks. The reason is that when investors need funds and are forced to redeem their product shares, products with high volatility mean that it is more likely to be redeemed at a loss.
Second, the smallest product is the best product.
The maximum retracement indicates the maximum percentage decline in the net asset value of a product over a period of time.
The meaning of this index is as follows: the maximum value of the rate of return retreat when the net product value reaches the lowest point at any historical point in the selected period. Maximum retracement is used to describe the worst possible situation after purchasing a product. Maximum retracement is an important risk indicator, which is more important than volatility for hedge funds and quantitative strategy trading.
No matter how defined, at least these two points are the current mainstream understanding:
1. The maximum retreat is as small as possible;
2. Retreat is directly proportional to risk. The greater the retreat, the greater the risk, and the smaller the retreat, the smaller the risk.
Third, products with relatively high Sharp ratio are the most reliable products.
Sharp ratio was invented by William F.Sharpe, a professor of finance at Stanford University, in 1966. Mainly used to measure the return performance of mutual funds. At present, it has become the most commonly used standardized index to measure fund performance in the world.
The calculation method of Sharp ratio is to subtract the difference of risk-free income from the average income of each period, and then divide it by the standard deviation of income return. It reflects the extent to which the net growth rate of unit venture fund exceeds the risk-free rate of return. If the Sharp ratio is positive, it means that the average net growth rate of the fund during the measurement period exceeds the risk-free interest rate. In the case that the interest rate of bank deposits in the same period is risk-free interest rate, it means that investment funds are superior to bank deposits. The higher the Sharp ratio, the higher the risk return of fund unit risk.
Whether at home or abroad, in the long run, for example, at least one year, the investment performance that can reach a reliable ratio of more than 2 is sustainable and difficult. Investors should pay close attention to such funds that can achieve a reliable ratio of more than 2 for a long time; We do not recommend investors to invest in any fund with a reliability ratio below 0.5.