GUANGZHOU (Fund China) – Last week, Shanghai Stock Index and Shenzhen Component Index declined sharply in the largest range of history. As a result, the net assets of open-end funds diminished a lot. Among them, the market index funds were the hardest hit. Overall, their decline ranges were in the forefront. This is mainly because the stock proportion of the index funds was almost the largest. At the same time, some bond funds rose in the slumping market, showing the importance of portfolio allocation.

Now the market is repressed by many factors. However, the market valuation levels had fallen sharply after nearly six months of decline.

But the future performance of a listed company may be adjusted downwards; it will make the seemingly reasonable valuation levels lose the advantage. In this situation, the market is still facing great uncertainties. For fund investors, risk control is the most important tasks. It is sensible to lower the allocation ratio of index funds and equity funds and moderately increase the allocation ratio of bond funds and money market funds.

Copyright Fund China 2009.

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