When choosing funds, many investors tend to choose funds by ranking their performance. However, in practice, it is difficult for a fund with excellent performance in the previous year to continue its good performance in the next year. Why? What are the deep-seated reasons behind it?

The rapid change of market style

One of the biggest characteristics of the A-share market is that the market style changes rapidly and the concept of hot topics changes rapidly. In particular, industry funds or theme funds mainly rely on the dividends of related industries or concepts, and most of these industries have strong periodicity. If the market only performed brilliantly in the previous year, it will inevitably face a certain degree of correction in the past, which also leads to the advantage of unsustainable performance.

The objective law of fund market

The objective law of the fund market is also an important factor that cannot be ignored. In fact, no matter at home or abroad, it is almost impossible for a strong enough person to win the fund championship every year.

Although in the public data, we can find some fund managers whose average annual performance is above 10% for five or even ten years, it is difficult to find Daniel who has won the performance championship for two consecutive years. It shows that excellent fund managers can keep their funds in an "excellent" ranking in a short time, but it is almost an "impossible task" to maintain "excellent" performance for a long time.

Even Buffett, the investment guru, is widely respected for his long-term investment performance, and even missed hot spots and underperformed the broader market in a single year. However, the masters have achieved excellent performance on the long-distance track, and it is obviously too short-sighted to look at the performance for only one year.

Of course, if it is a good fund target, and the fund's performance in the previous year was excellent, but the performance in that year was not particularly ideal, it may only be temporarily backward. After all, judging from the annual performance of the above-mentioned funds, the probability of re-emergence after the trough is still relatively large.

And you can't blindly sell because of the short-term growth lag, because at this time the fund may be at a low point.

When we examine a fund manager and a fund, we must have a long-term pattern and vision. Don't be obsessed with the staged ranking lead and lag. Considering a series of inevitable and accidental factors clearly, it will be easier to formulate a clear fund strategy.

Starting from these trading motives, combined with the objective situation, we should pay attention to evaluating the current ranking position of the funds we hold, and measure whether the fund manager wants to further expand the leading edge or stabilize the current position, because different ideas will be implemented in different actions and will eventually be reflected in the performance of the funds.

I hope the above contents are helpful to you.