GUANGZHOU (Fund China) – When the stock market falls, many of the funds’ net will be reduced. But among the decreasing funds, there will be some kinds of funds whose decreases are smaller. These kinds of funds are known as the “resistance-risk funds.” The reason why such funds’ decreases are smaller can not be separated from the following five aspects.

First is the stability of the investment portfolio. In the felling process of the stock market, if the funds are to be frequently adjusted and the turnover rate is to be increased, the funds’ net will be diminished because of the increase of the opportunity cost and transaction costs.

Second is the proportion of cash assets. When the stock market continues to decline, if the proportion of the stock fund assets takes up too much of a fund’s total assets, its net assets will be affected greatly. So, in the decline stock market, it is very sensible to reduce the proportion of the stock assets.

Third, the continued marketing activities can help a fund to gain the finance to lower the cost. The interim adjustment of stock market always brings the opportunities to enlarge the proportion of the stock assets. But there would be a situation in which the fund may have had a heavy proportion of stock assets and the company has little cash in hand. In this situation, fund companies can obtain cash through the continued marketing activities. In this way, it can lower the costs of the holding shares and then promote the growth of the fund net.

Fourth is the fund dividend in the decline market. In the fluctuating market, many funds choose to have funds dividends to ensure the investment profits. It can be said that the fund’s investment portfolio will be more stable after paying dividends. Just so, the quality of the assets is better guaranteed for it delays the decrease rate in the fund net.

Fifth, the funds which are strict to fund contracts perhaps are resistance-risk funds. Each of the products has its own investment style and characteristics. To choose these funds, investors have to make sure their style and characteristics. Deviating from the stipulations of contracts, the growth of fund net will be uncertain.

Copyright Fund China 2009.

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