What does the fund's index income method mean to the valuation of shareholding?

Many fund companies' announcements use the index expected annualized expected return method to value the stocks held by their funds, especially when there are many suspended stocks in the market, many funds will use the index expected annualized expected return method to value the suspended stocks. So what does the expected annualized expected return method of this index mean in fund valuation?

Generally, this kind of fund announcement is based on the relevant provisions of China Securities Regulatory Commission's Guiding Opinions on Further Standardizing the Valuation of Securities Investment Funds (CSRC Announcement [2008] No.38).

First of all, the situation of stock valuation here is mainly aimed at "(2) for investment products with active market, such as no market price on the valuation date, major changes in the economic environment or major events affecting the securities price after the trading day, so that the impact of potential valuation adjustment on the fund's net asset value on the previous valuation date exceeds 0.25%, we should refer to the current market price and major changes of similar investment products to adjust the trading market price and determine the fair value."

If the stock held by the fund exceeds 0.25% after adjusting the valuation, it is necessary to value the suspended stock.

Then, in order to maintain the consistency of valuation, as long as one fund of a company encounters this situation, the funds of the whole company should adopt the same valuation price.

Then, for the question of which valuation method to use for suspended stocks, there is no document in China. Please go to Baidu's "Reference Method for Valuation of Suspended Stocks", which are several valuation methods provided by the valuation team of CSRC. The "index expected annualized expected return method" is widely used in the industry.

Methods: The method of index expected annualized expected return.

For the stocks that need to be valued, the index expected annualized expected return method is used for valuation in two steps:

Step 1: On the valuation date, the daily expected annualized expected rate of return of the corresponding industry index published publicly is taken as the expected annualized expected rate of return of the stock.

Step 2: Calculate the fair value of the stock on that day according to the expected annualized expected rate of return obtained in step 1.

The advantages of the index expected annualized expected return method: the valuation method is relatively fair, similar to the industry attributes, and can reflect market changes and industry changes. The operation is relatively simple, there are public data, and it is easy to express, which is conducive to eliminating the influence of system risk on individual stocks.

Disadvantages of the index expected annualized expected return method: the situation of each company is very different, the industry index can not represent the situation of each company, and the company's own risks may not be reflected. The industry division standards in the market are not uniform.

In the expected annualized expected return method of the index, the commonly used index in the industry is the SAC industry index provided by China Securities Index Co., Ltd., please refer to China Securities Index Co., Ltd. for data. It seems that it has been renamed AMAC Industry Index because there is a separate fund industry association.

Then, if you want to use the index expected annualized expected return method for valuation, you have to calculate the price every day. Generally, when stocks resume trading, market valuation will be adopted. However, the daily limit is still limited, depending on whether the transaction is active, and then judge whether to continue the valuation. For example, a word board has a daily limit, the transaction volume is not large, and the valuation price is higher than the daily limit price, so the valuation price will continue to be used.

Speaking of this, aside from the topic, I remember that this guidance was actually issued in 2008, mainly aimed at the continuous plunge of the market. In order to avoid damage to the interests of the holders, this opinion was issued. Generally speaking, the index expected annualized expected return method is used to protect the interests of the holders.