Concept:

The volatility of the fund is expressed by the statistical concept "standard deviation", which refers to the deviation between the return rate of each interval of the fund and the average return rate of the interval in the past period.

Standard deviation is a statistical concept, which reflects the degree of dispersion. At present, it is widely used to measure the risk of funds and stocks, so it is used to express the volatility of funds and reflect the fluctuation range of fund and stock returns.

In investment funds, people generally pay more attention to performance, and then after buying the fund with the best performance recently, the performance of the fund is not as good as expected. This is because the selected fund fluctuates too much and has no stable performance.

A realistic example

If there are two funds, fund A will earn 8% in the first month and fund B will earn 20%. At this time, people may buy fund B and abandon fund A. ..

In the next two months, the income of fund A is still 8%, but the income of fund B is-10% and-14% respectively.

At this time, the average rate of return of funds A and B is 8%. In some months, the yield of fund B is much higher than that of fund A, but the volatility of fund B is much higher than that of fund A. The volatility (standard deviation) of fund A is 0%, and the volatility of fund B is 16%. In this case, it is recommended to choose fund a.

Master the law

The greater the volatility (standard deviation), the greater the degree of possible changes in the future net value of the fund, the smaller the stability and the higher the investment risk.

The volatility (standard deviation) of a fund is 20%, which means that the future net value of the fund may rise or fall by 20%.

Summary: the law of actual operation selection

In the case of the same rate of return, give priority to funds with low volatility; In the case of the same volatility, the fund with high yield is preferred.