But many investors don't understand this. Therefore, in the early days of domestic funds, many fund companies will split the fund shares into multiple shares, reducing the net unit price to meet the needs of investors. Because many investors just think that the fund of 1 yuan is more cost-effective than that of 2 yuan.
In fact, in index funds, the net value has little effect on the investment value of the fund.
3. Net worth and valuation
What is the relationship between net worth and valuation?
Simply put, the net value of index fund = P/E ratio * profit+dividend.
For most indexes, profits are rising for a long time, and dividends are accumulated every year. Therefore, even if the valuation remains unchanged, the net value of index funds will rise.
For example. 300 value index fund 5 1967 1.
At present, the price-earnings ratio in September of 20 19 is about 8.4 times, which is similar to that in July of 20 12.
But in July of 20 12, the net value of 5 1967 1 was 0.7 yuan;
In September of 20 19, the net value of 5 1967 1 has risen to 1.67 yuan. Up 140%.
In 7 years, the P/E ratio has not changed, but the net value of the fund has increased by 140%. Most of the reasons come from rising profits and dividend accumulation.
Conversely, P/E ratio = market value/profit. Sometimes the market value goes up, but the profit goes up more, and the P/E ratio may drop.
Therefore, in the stage of updating the financial report every year, we will also see some indicators in the valuation table. Although it rose in the short term, the valuation fell. There is also a reason for this.
This is the relationship between net worth and valuation.
4. Summary
The index funds we invest in can earn profits and dividends by choosing varieties with good long-term profit growth.
At the same time, buying in the low valuation area can also get the income from low P/E ratio to high P/E ratio.
It's not difficult to make money when the two are superimposed ~
What is Liu Yu¡¯s position? Independent director of Yunda Co., Ltd.