good indicator
Each indicator is equivalent to a car. Some cars have good performance, some have poor performance, and some have unstable performance. The index is the same. Different industries have different growth rates and different cycles.
There’s nothing wrong with picking the best car, ie the fastest growing industry index or broad-based index, in times of uncertainty. Even with lower short-term returns, it will still outperform other indices in the long run.
good valuation
Although a good car can go faster, the starting point is the same. If the starting point is different, then a good car may not be able to run first. So, to get to the finish faster, the track should be shorter and the cars perform better. The same goes for indexes. Different index valuations correspond to different starting points. The lower the index valuation, the closer to the end. That said, the lower the index valuation, the better the returns. Of course, there may also be cyclical funds catching up.
good fund
(1) Tracking error
The passive index fund itself is designed to track the index, so if the error between the fund and the index is relatively large, even if the return is relatively good, it is not our best passive index fund, so the tracking error of the fund should be relatively small, as we introduced the fund. as you see it, or check the Fund’s periodic reports.
(2) Fund scale
Just like we should pay attention to the gas in the car, we should also pay attention to the size of the fund. It is not safe to face funds that may face the risk of liquidation at any time. Therefore, the size of the fund we choose should be larger. It is worth noting that the total size of the fund should be Class A + Class C. Many people mistake the Class A fund and the Class C fund as two separate funds. Therefore, the fund seems to be facing liquidation risk at any time.
(3) Fund rate
Investment income = fund income – cost = fund income – subscription fee – redemption fee – management fee – custody fee – sales service fee. A fund with a small tracking error has roughly the same return as the index, so the lower the cost, the better, so our returns can be higher.
In addition, the purchase fee of third-party wealth management platforms is generally discounted by 1%. For platforms that do not discount the purchase fee, there is still a big gap. There may also be a 10% discount for subscriptions on the official website of the fund company , and the subscription fee may even be waived, or the subscription fee may be waived for purchases with the fund company’s monetary funds. When you want to change the investment fund, you can first check whether the fund can be directly converted into the investment fund you want to change. This saves time on the one hand and intermediate costs on the other.