GUANGZHOU (Fund China) – A good fund portfolio is not decided by the number of the funds. Instead, it is decided by the degree of difference of a fund in the portfolio.

In principle, first, the proportion of money market funds, bond funds, mixed funds and equity funds mainly determines the expected yield of the fund portfolio. Second, the allocation of equity funds and mixed funds in the core portfolio determines the long-term profits of the fund portfolio.

In order to gain a substantial profit in funds, investors should first learn their risk tolerance and make a relatively clear investment goal, and then carefully select 3-4 equity or mixed funds which have stable performance to constitute the core fund portfolio of their own.

Even if they are equity funds, some funds may prefer to large-cap value stocks so as to be stable, while some funds may prefer to small-cap growth stocks to pursuit of high risk and high yield. Some funds that do not particularly care about dividends may pursuit of the assets’ long-term value-added. But some funds will do their dividends once they have earned some profits so that the interests of investors can be guaranteed. To spread the risks associated with a specific style, a fund portfolio should be made up of the funds with different styles and characteristics. However, the number of funds in the portfolio should be appropriate for it doesn’t mean that the more funds you buy, the less risk you will have.

In addition, the fund portfolios also need to be adjusted according to market changes so that it can further spread the risks and then increase the profits.

Copyright Fund China 2009.

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