A Question "Yi" Answer: "Chase Up To Kill Down", Not Reliable?

        Easy answer: chasing up and killing down actually means that the price can still rise or fall for a period of time. However, it is difficult to predict how long and how much it will last.

Taking the CSI active stock fund index as an example, this paper simulates a strategy of chasing up and killing down the fund index, that is, buying the fund index by 10% of the whole position, and selling the fund index of the whole position when the fund index falls by 10%.

      Since 2016, only 41% of the stock fund index has been bought and sold according to the strategy of "chasing up and killing down". However, 68% of the return can be obtained by buying and holding the index on the first trading day of 2016, and the yield of "chasing up and killing down" is 27% lower than that of buying and holding.

As can be seen from the figure, in the volatile market from 2016 to 2019, this strategy of "chasing up and killing down" did not get better returns; However, in the bull market starting in 2019, the return of the strategy obviously lags behind the long-term holding.

      Moreover, chasing up and killing down may lead to frequent operations, resulting in higher fund redemption costs. Under normal circumstances, the redemption rate of active stock funds sold within one year is generally 0.5%. If the whole position is operated 12 times in a year, the transaction cost will be at least 6% / year, which will reduce the income.

Ordinary investors should resist the temptation of chasing up and killing down, desalinate short-term fluctuations and firm long-term holdings.

Knowledge patch:

When will my funds arrive after redemption?

Fund redemption requires a certain clearing time, and the length of fund arrival time is related to the type of fund, usually as follows:

Money market fund: after the investor's redemption application is successful, the fund manager will instruct the fund trustee to transfer the redemption money from the fund custody account on T + 1 and transfer it to the investor's bank account through the sales agency.

QDII, fof: after the investor's redemption application takes effect, the fund manager will pay the redemption money within t + 10 days (including that day).

Other types of funds: after the investor's redemption application takes effect, the fund manager will pay the redemption money within t + 7 days (including that day).

(the specific time of fund redemption to the account shall be subject to the agreement of each fund contract and the actual operation of the fund sales agency. Investors are requested to consult the fund sales agency.)