Figure: The one hard standard of a quality fund — its NAV makes a new high in every bull-bear cycle; the curve fluctuates with the cycles, yet each peak is above the last.
What is the standard for judging a quality fund?
Unlike the many criteria and complex factors floating in the market, in our research framework a quality fund boils down to one standard:
Its NAV makes a new high in every bull-bear cycle and delivers excess return every time.
Simply put: it makes money in every bull market, and makes more than others.
Even if you are unlucky enough to buy it at its very top, historical patterns at least say you will recover and break even eventually.
Figure 1: Spread several bull-bear cycles out and the NAV centre steps up each round; lows rise too — a bear is a drawdown, not a wipe-out.
Figure 2: Over the same window the fund NAV (purple) stays above the CSI 300 equal-weight benchmark (grey dashed) — that is the excess return.
The above is the general standard. Different fund types add their own conditional factors — for example: fund size, time since inception, volatility, sentiment, and maximum drawdown, stage returns, etc. The specific metrics are explained in detail when we cover each fund type.
There are over 18,000 funds in the market, but only 1,233 meet the investment standard.
⚠️ This article is a methodological framework for illustration only and does not constitute any investment or trading advice. Markets carry risk; decisions require caution.
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