There are generally the following possibilities for the decline in the net value of funds: First, the sharp decline in the basic market leads to a decline in the net value. This decline is likely to be the normal adjustment and fluctuation of the basic market. In the case that the trend of the basic market has not reversed, the redemption decision is actually to turn temporary book losses into actual losses. Second, fund companies make their net value fall through spin-offs or dividends. This decline is actually a marketing tool of fund companies, which has no effect on the income of fund holders. Third, the poor investment ability of fund managers leads to the backward performance of funds. In this case, investors need to examine the long-term performance of the fund before making a decision. For example, the performance of large-cap funds in China in the first three quarters of 2006 has been excellent, but the ranking of performance in the fourth quarter declined. Since 2007 (as of March 2007, 15), it ranks first among equity funds with a net growth rate of 53.82%. If investors redeem the fund because of its performance in the fourth quarter of 2006, they will not be able to share the future growth.
There are also some investors who think that the market has gone up and the net value of the funds held in their hands has also gone up, so they should be redeemed, which is not necessarily rational. Many short-term investors are used to selling when the upward trend is good, and this method cannot be applied to investment funds. Because investing in funds is a relatively long-term process, in this process, the net value of funds will fluctuate with the fluctuation of the market, and its investment income cannot be achieved in one step and immediately.