Core Viewpoints - Investors should carefully assess their risk tolerance when selecting funds, opting for those that align with their risk preferences, have experienced research teams, stable investment strategies, and robust risk control [2][3] - It is essential for investors to move beyond a single focus on returns and to construct diversified portfolios with funds that have different risk-return characteristics to mitigate risks during market volatility [2][3] - Emphasizing a long-term holding strategy can help investors avoid short-term timing and emotional decisions, leveraging time to smooth out market fluctuations and reduce the investor return gap [2][3] Summary by Sections Low Volatility Debt Products - Conservative mixed funds have an investor return gap of -0.86%, and fixed income funds have a gap of -0.62%, significantly better than the -2.65% gap of actively managed equity funds [3][23] - The lower investor return gap in debt products is attributed to their defensive nature and lower volatility, which helps reduce short-term trading impulses among investors [6][23] Passive Broad-based Products - Broad-based passive funds stand out with a positive investor return gap of 2.81%, particularly due to significant inflows from institutional investors during market lows, which did not participate in previous downturns [3][9] - The influx of funds during low market phases, especially from state-backed entities like Central Huijin, has contributed to the positive investor return gap in broad-based ETFs [9][10] Improving Investor Returns - To enhance investor returns, a collaborative ecosystem between demand and supply sides is necessary, focusing on rational decision-making and systematic fund selection frameworks [17][18] - Investors should clarify their risk preferences to ensure alignment with their investment choices, reducing decision-making errors due to risk mismatches [18] - Long lock-up periods in certain funds, such as pension target FOFs, have shown better investor return gaps, as they help mitigate frequent redemptions during market volatility [19][20]

Core Viewpoints - Investors often ignore potential risks of funds due to blind chasing of high returns, leading to lower returns compared to the funds' performance. This is particularly evident in sector funds, which attract a lot of follow-up capital during market upswings but experience severe drawdowns during downturns, causing investors to sell at low points and miss subsequent rebounds [3][11]. Group 1: High-Risk Fund Characteristics - Funds with higher volatility generally exhibit greater investor return differentials. Over the past five years, sector funds, active stock funds, and actively managed funds with over 70% equity positions had annualized volatility rates of 29.05%, 23.95%, and 23.86%, respectively, while conservative mixed and fixed-income funds had much lower rates of 5.33% and 2.34%. Corresponding annualized investor return differentials for the former were -3.59%, -2.65%, and -2.17%, compared to -0.86% and -0.62% for the latter [3][4][8]. - Funds with highly concentrated holdings tend to have higher volatility and more significant investor return differentials. While concentrated strategies can yield strong returns if the fund manager selects outperforming securities, they also expose investors to substantial losses when market conditions shift rapidly [3][9]. Group 2: Sector Fund Dynamics - Sector funds, due to their focus on specific industries, exhibit more pronounced volatility. For instance, the annualized investor return differentials for medical and consumer sector funds were -7.70% and -5.16%, respectively, reflecting the impact of market conditions and investor behavior during downturns [13][15]. - A case study of the China Europe Medical Health Mixed A fund illustrates the risks associated with sector funds. After a significant rise during the pandemic, the fund experienced a drawdown of over 50% as market conditions changed, leading to a five-year annualized investor return of -17.07%, significantly lagging behind the fund's annualized return of -1.11% [14][15]. Group 3: Recommendations for Investors - Investors should establish a multi-dimensional product evaluation framework, moving beyond a single focus on returns. Understanding one's risk tolerance is crucial to avoid deviating from suitable product categories due to short-term performance temptations. When selecting funds, it is essential to analyze historical volatility characteristics and the underlying investment strategies [10][17].