GUANGZHOU (Fund China) - Facing different fund products, investors may prefer to those whose nets are lower. They think those funds are cheaper and they can buy more. However, experts suggest that a fund’s investment income is subject to its net growth rate not its net level, which is different from stocks. To invest in a fund, the most important thing to look at is its future profitability. In some situation, some expensive funds may reflect the fund managers’ standards and the funds’ market experiences, which might be more trustworthy.

The rise of stock prices is subject to the increase in profitability of the listed companies. Once the increases in profitability of the listed companies fail to keep pace with the rising rate of stock prices, stock prices will inevitably decline. Therefore, it is very easy for the stock prices to decline at a high level. However, the investment fund is a collection of stocks and the stock are like eggs in the basket. Fund manager will take out the bad eggs and put in the good eggs at any time. Thus, if a fund chooses the correct stocks and has a proper investment portfolio, its net can be unlimited up.

Fund net is decided by a fund company’s performance in the past, which is completely different from stock price. High fund net indicates a fund company’s performance was good in the past and its potential to continue to increase in the future is greater. Low fund net indicates a fund company’s performance was not good and its pace of future growth may still lag behind a net high fund’s.

Since the time of the funds’ establishment is different, and there are many differences in dividends, and some funds of constant dividends may be mixed together with the net low funds, so only to see the Fund’s net may be biased. Therefore, it is particularly important to determine a fund by its net growth rate.

Copyright Fund China 2008.

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