Aggressive allocation fund is a kind of hybrid fund, which literally means a fund with aggressive investment style and high investment risk in order to obtain high expected annualized rate of return. It is characterized by flexible allocation of funds in China's stock, bond and money market instruments, which does not meet the classification standards of stock funds and bond funds; Stock assets account for more than 70% of the net asset value.

How to interpret the characteristics of risk expectation and annualized expected return of such funds, investors may wish to look at it from two angles. (Author: Cassie Wang)

First of all, in terms of classification standards, radical allocation funds do not meet the classification standards of the CSRC for stock funds and bond funds; Judging from its positions in the past three years, the proportion of stock assets to net value is ≥70%. Its meaning is not only that the lower limit of the position of such funds can be lower than 60% in the contract, but also that fund managers have basically adopted relatively high stock positions in history, that is, the average stock position is higher than 70%. In other words, the contract gives the fund manager more space to choose positions, but the investment strategy of the fund manager is still more radical. Therefore, for this kind of variety, its risk characteristics add a layer of meaning to stock funds, that is, timing risk.

Secondly, from the actual investment results, the investment style of fund managers of radical allocation funds mainly presents three characteristics.

First, we basically don't choose positions, only through stock selection or industry allocation to achieve the purpose of obtaining the expected annualized income beyond expectations. For example, funds of this style, such as Guofu Tianyi Value, Bank of Communications Steady, Morgan China Advantage, Dacheng Blue Chip Steady, account for the vast majority of this category. Its historical position is relatively stable at more than 70%, and fund managers do not frequently change positions. The characteristics of annualized expected return of risk expectations are similar to those of equity funds.

The second is to lay out positions in advance according to the general trend of the market to avoid risks or share the market rise. Typical funds, such as China's large-scale selection, historically, the fund manager's strategy of changing positions has always been gradual and forward-looking, and the probability of success in choosing the right one is higher than that of choosing the wrong one. Therefore, with its small fund scale, the fund can try its best to keep the fruits of victory in the bear market and rebound quickly in the bull market, making the expected annualized expected return of the fund lead the industry after long-term risk adjustment.

Third, funds with relatively frequent position selection, but the success rate still needs to be tested, such as AIA Huatai, made frequent position selection in 2009, but it did not conform to the rhythm of market operation. Therefore, the performance in 2009 is also slightly behind. No matter what kind of operation strategy the fund manager of radical allocation fund adopts, from the perspective of historical fluctuation and the downside risk of Morningstar, its higher comprehensive risk is often similar to that of equity funds.

Therefore, investors can't ignore its potential high risk because it belongs to a hybrid fund.