Edit: Financial 360 finishing
Source: Fusion 360
Date: 2014-03-24

Summary:

The seven-year annualized rate of return is the annual rate of return converted to the average of the money funds over the past seven days.

The seven-day annualized return rate can only be viewed as a short-term indicator. It can roughly refer to the recent profitability level, but it cannot fully represent the actual annual income of the fund. The return will be fluctuating by the fluctuation of the investment market. The seven-year annualized yield can be used as a reference for investors’ currencies when comparing fund income with other investment products.

Usually reflect two indicators of the level of money market fund returns: First, the annualized yield on the 7th; Second, 10,000 units per unit of return.

As a short-term indicator, the 7-year annualized yield is only the information of the fund's profit level in the past 7 days, and does not mean the future level of income. What the investor really cares about is the second indicator, that is, the unit revenue per 10,000 shares of the fund. The higher the index, the higher the investor's real gain.

Under different ways of carrying forward income, the formula for calculating the annualized rate of return on the 7th should also be different.

Currently, there are two types of income carry-overs in money market funds:

The first is that “dividends will be paid on a daily basis and carried forward on a monthly basis.” This is equivalent to the daily interest rate, monthly, and compound interest.

The second is "Dividends on a daily basis, carried forward by the day," which is equivalent to compound interest between Japan and Japan.

The simple profit calculation formula is: (∑Ri/7) × 365/10000 copies × 100%

Compounding formula is: (∑Ri/10000) 365/7×100%.

Among them, Ri is the most recent Gregorian calendar day (i=1,2.....7)

The fund's annual yield on the 7th is rounded to three decimal places.

Regulatory agencies in some countries have strict calculation formulas for the seven-day annualized interest rate: if a monetary fund has a value of A before the first day of trading, and a value of B after the end of the seventh day of trading, the cost of the seven days It is C (sometimes, such as Yu Bao, etc., according to 2014/3/15, C=0).

The formula for the annualized seven-day return is (B-A-C)/A/7*365*100%.

For example, a monetary fund is worth 100 yuan (that is, A=100) per share before the market opening on March 1, and it is worth 101 yuan (that is, B=101) after the market was closed on March 7, which will be bought and redeemed for the seven days. There is no fee (that is, C=0). Then the seven-day annualized rate of the fund is (101-100-0)/100/7*365*100%.

According to expert analysis, the seven-year annualized rate of return is calculated by summing up the net income per 10,000 product products for the past seven days. The seven-day annualized rate of return as the average indicator can only reflect the general fluctuations of the past seven days. The short-term, seven-day annualized yield rate of a certain product may mean that the investment manager's operating style is more radical, and the daily gains that users receive are often a bit like roller coasters, and the stable high-yield for ordinary users is king.

The bigger the money fund is, the greater the right to speak in terms of investment and the higher the gains. However, some money foundations use “regular products” or “self-subsidies” to express high returns, but such high returns cannot be sustained.

Experts believe that compared to seven-day annualized earnings, consumersMoney managementShould pay more attention to tens of thousands of products net income or the total value of 10,000 shares. Thousands of daily income, which is the actual gains on the day, and the 7th annualized rate of return is the conversion of the past seven days' earnings to the annualized rate of return, not the daily rate of return. Investors should pay more attention to long-term performance stability when they look at product revenue.

In addition, when investors select products, they should comprehensively compare, including specific income, stability ratio, purchase threshold, flexibility of withdrawal, usage scenarios, and many other conditions. A good or bad product is actually a comprehensive competition.

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