GUANGZHOU (Fund China) – In general, there are five factors that determine a fund’s performance.

First is the assets allocation. The more stocks investors allocate the greater revenue they may have. At the same time, the risk will be higher.

Second is the trend of the market. The indicator to judge the market is the comparison base. A good fund should have a stable style and an appropriate comparison base.

Third is the ability of the fund manager. The manager should be good at selecting stocks and buy stocks in a good time. His contribution is to beat the comparison.

Fourth is the control to the transaction cost. Each transaction will have 0.1 percent of transaction cost. So, a good fund should decrease its operation to lower the change rate so that it can protect investor’s profit.

Fifth is the risk of moral hazard. What fund managers do is using investors’ money to invest and bringing them revenue. However, fund managers’ income does not totally match to the funds’ performance. So, there may be the risk that fund managers make profits for themselves.

Copyright Fund China 2009.

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