Analyze how the maximum drawdown guides fund investment

A-shares gave investors a "bear hug" at the beginning of the Year of the Ox, and then retreated all the way. Popular tracks, white horse leaders, and fund heavyweights that continued to rise in the early stage all fell, and most funds' net worth retracements were relatively large. Today the editor will share with you how the maximum drawdown guides fund investment, for your reference only!

How the maximum drawdown guides fund investment

High returns are what I want; low returns are what I want; Retracement, whatever I want.

However, "profit and loss come from the same source", and generally you cannot have both.

Suppose that the return rate of your favorite fund in the past three years is 90%, and the maximum drawdown rate is 20%. Then before you subscribe, you should ask yourself whether you are willing to bear the possibility of losing 20% ??of your principal to achieve this 90% expected return. If you are willing, please relax when the stock falls by 20% during the holding period.

Volatilities are the normal state of the market, and retracements are not that scary. If you put investment in a longer time dimension, you can see that many managers can always use time to digest past retracements. Lose. Judging from the performance of partial stock hybrid funds in the past three and five years, most funds have achieved positive returns, and the average returns are also outstanding.

So, if we have selected the fund we like, and the risk-return characteristics match us. Then when the market falls, you will be more calm in the face of fund fluctuations, making it easier to hold on and hold on for a long time. Even when the market is not good and the net value of the fund retracts sharply, because you have a good understanding of the fluctuation characteristics of this fund and you have sufficient funds, you can choose to stick to fixed investments or increase positions appropriately to reduce the cost of holding positions and lock in future gains. Opportunities

It is normal for the net value of a fund to retrace its course

One of the oldest financial rules is that returns are always accompanied by risks. If you want to obtain higher investment returns, you are bound to bear the accompanying risks. As an investment and financial management product, the fund does not guarantee that customers will make profits, and the net value of the fund will not keep rising.

The maximum drawdown of a fund is related to the investment target, investment strategy and investment style of the fund manager.

Generally speaking, returns are directly proportional to risks. The higher the returns, the greater the risks. The drawdown of stock funds is generally greater than that of mixed funds, the drawdown of mixed funds is generally greater than that of bond funds, and the drawdown of theme funds is generally higher than the drawdown of non-theme funds.

Fund managers’ different attitudes towards risks will also affect the fund’s drawdown. Funds managed by fund managers who value the margin of safety in valuations will generally have smaller drawdowns than funds managed by fund managers who downplay valuations and value the future growth of stocks.

In addition, the quality of the market conditions also affects the extent of the fund's retracement. The fund's retracement in a volatile market is generally much greater than the fund's retracement in a bull market.

Encounter.

The role of the maximum drawdown of the fund's net value

The maximum drawdown indicator of a fund reflects the worst possible situation that may occur after buying a fund.

When choosing a fund, you must look at its historical maximum drawdown rate, and then weigh whether you can accept such a maximum risk. If the maximum drawdown indicator of a fund exceeds your tolerance, you need to be cautious when choosing to invest in this fund.

The biggest fear is that when buying a fund, you will jealously pursue high returns and ignore the largest drawdown of the fund in the past.