We can compare the selection of funds to the selection of beauties. In the face of many beauties, we cannot be dazzled. We should learn to choose the most beautiful beauty. As the saying goes, “beauty” is the only way to get married, so beauty is not the only important criterion.
There are many types of funds now. How to choose a high-quality fund? We have summed up three important experiences: one is to look at the overall performance of the company, the other is to look at the fund’s three-year performance, and the third is to look at the stability of the investment team. Through these three simple experiences, we have selected fund company products with stable risk, low shareholding concentration and turnover, high information transparency, and focus on investor education . These products will have a higher probability of investment success.
Below, let us explain these three experiences separately:
- Take a look at the company’s overall performance
The selected company is not a big company or a good company. Some smaller fund companies have also done well. Before choosing a fund company, we suggest that friends should investigate the overall performance of the fund company, not just the fund’s performance. Only from the perspective of overall performance can we understand the management and operation capabilities of the investment team. Last year, many funds seized the hot spots and performed well, but they did not rule out some short-term speculation. So if only one or two of their funds are doing exceptionally well and the others are doing mediocre or poor performance, we need to be quite cautious about investing.
- Judging from the fund’s three-year performance
The fund’s investments should emphasize the word “stability”. The current economic environment is also the word “stable”, and then seek progress in stability. Then the fund is a good fit for the current market environment. We know that the fund’s income is sustainable and an important reflection of investment style. When choosing a fund, you should not only look at the income growth of the previous year, but also the income growth of the previous three years, because only funds with relatively stable and sustainable returns will have relatively low investment risk. Compared to those short-term insider funds, stable funds are more trustworthy.
So what if the fund doesn’t have three years and doesn’t see its historical performance? Such a fund is usually a new fund . Only we can judge future market trends. If the future is bullish and the current market is at a low, then the new fund has an advantage. If the current market is a bull market, old funds have an advantage. Objectively, compared with funds with historical performance, funds without historical performance have no advantage in this regard, and new funds should act cautiously.
- Look at the stability of the investment team
There is always staff turnover in the team, which means that the team must be unstable, and the investment team determines the growth of the fund’s performance. Therefore, the stability of the investment team is also an important basis for investors to choose funds. Generally speaking, a relatively stable team should have a relatively complete internal management and governance structure. Otherwise, if a fund company leaves the company repeatedly, it means that there must be a problem. The lack of team cohesion and the instability of the team will inevitably affect the sustainable growth of the fund’s performance. Of course, from the perspective of the stability of the investment team, we lack certain sources of information, but in the Internet age, we can still learn some clues through the World Wide Web.
In short, the fund company can play, has good service and high professionalism, which can save us 50% of the trouble of fund allocation, get twice the result with half the effort, and also contribute to our satisfaction. Therefore, companies with good service quality usually represent the characteristics of customer-based company culture, which is especially important in the dizzying fund market.