Why did the fund rise during the epidemic? Should we increase our holdings during the epidemic?

We all know that fund investment is a common way of investment. Many people will use their extra money to buy funds for investment. Fund investment requires certain skills and needs to consider various factors. So why did the fund rise during the epidemic? Let's take a closer look!

Why did the fund rise during the epidemic?

1. The central bank took action to support the market, and various favorable policies were introduced to boost the economy

I remember that I could still travel around before the Chinese New Year, but I didn’t expect the epidemic to become more and more serious, until the news reports repeatedly emphasized that staying at home is a contribution to the country.

At the beginning, I opened Weibo every day and saw that the epidemic had not yet passed, and the number of confirmed cases increased again today. The whole people were panicking. At this critical moment, the stock market could not be timid. Once it was timid, the impact of this panic on reality would be more serious.

The best explanation is that more than 3,000 stocks hit the daily limit on February 3. In order to stabilize the stock market, the People's Bank of China injected a total of 1.7 trillion yuan in liquidity on February 3 and 4. This money has to find a way out, and the stock market is the biggest beneficiary.

In addition, China's various economic sectors have successively introduced a number of policies to help companies overcome the difficulties caused by the epidemic. Favorable policies and loose liquidity have boosted the economy and accelerated the process of production recovery.

These policies are very good news for the stock market.

2. Panic sentiment is gradually digested and investor confidence increases

According to data from the National Health Commission of China, the number of unexpectedly confirmed cases in Hubei Province showed a downward trend from February 3 to 10. At the beginning, everyone was panicking, but this panic was gradually digested over time.

Data shows that the global attention to the novel coronavirus has gradually declined from its peak on February 2. This can actually be seen from the hot searches on Weibo.

Before the market opened, all the hot searches on Weibo were dominated by topics related to the epidemic. Entertainment information, which was once a hot search, disappeared, and various negative news broke out frequently. After the market opened, other hot searches gradually appeared, and the hot search topics changed significantly, with entertainment news gradually increasing.

We all know that short-term uncertainties will not affect the long-term performance of the Chinese economy. Once the epidemic is under control, factories gradually resume work, and supply is restored, consumer demand that was previously suppressed by the epidemic will surely grow like a flood.

3. Others

In addition, 2020 is the year of building a moderately prosperous society in all respects and the end of the 13th Five-Year Plan. Standing at the historical intersection of the "two centenary" goals, the country will surely introduce more favorable policies to stimulate the economy in the future.

As of now, the long-term growth trend of China's economy has not changed, and there are still many opportunities in the A-share market.

Not only that, foreign capital, which we call "smart money", has also been overweighting A-shares during this period. Stimulated by various reasons, the stock market continued to rise during the epidemic, driving the rise of funds.

However, based on the current situation, don’t blindly chase the rise, and make sure to make money within your circle of competence. As Buffett said, “When others are greedy, I am fearful, and when others are fearful, I am greedy.”

As for fund fixed investment, we still have to adhere to the low valuation investment method and insist on fixed investment. Always remember one sentence: the A-share market has never lacked investment opportunities, but what it lacks is money!

Should funds increase their holdings during the epidemic?

On the first day of trading, northbound funds had a net inflow of nearly 20 billion yuan, setting a record for the second-highest single-day net inflow in history. And the net inflow continued on the second day.

The “smart money” has all taken action, and many individual investors have also begun to consider increasing their positions to buy at the bottom.

For those who want to increase their positions, it is recommended that you think about the following questions first, and do not increase your positions blindly! First examine whether you have the conditions to increase your positions?

If the funds you use for investment have other uses in the short term (considerable within half a year to a year), or you want to buy at a low price to make some quick money, it is recommended that you do not increase your position easily.

As mentioned above, A-shares may fluctuate repeatedly for a period of time under the epidemic. As for how long this period will last, no one knows. The key point may depend on the control of the epidemic. Based on the past epidemic situation, many institutions have judged that there may be 1-2 quarters of market impact. Therefore, whether the risk of market fluctuations for 1-2 quarters can be tolerated should also be considered clearly.

How to add positions? It depends on the individual!

For investors who previously held a large position, they can leave it alone; for investors who held a small position, a rapid decline may bring new opportunities to enter the market. However, it is also necessary to be cautious, and you can choose to gradually invest by buying in batches or by fixed investment.

The future market is difficult to predict, so don't use up all your money at once.

How to operate funds during the epidemic

First, equity funds will be impacted in the short term; second, since overseas markets are not doing well, QDII products are not the first choice. Therefore, fixed income funds become the first choice.

On the one hand, the proportion of safe-haven funds allocated to the bond market has increased, which is conducive to the rise of bond prices. On the other hand, in order to maintain reasonable liquidity in the banking system and smooth operation of the money market during the special period of epidemic prevention and control, the central bank's monetary policy tends to be loose, which will guide market interest rates to fall slightly, which is beneficial to the bond market.

However, not all bond funds can be "blindly bought"! For example, due to the equity market pullback, the adjustment of convertible bonds is also inevitable. Currently, the maximum drawdown of convertible bond funds this year leads among bond funds.

Relatively speaking, short-term bond funds are a good choice, but you also need to avoid short-term bond funds with a high allocation ratio of credit bonds, especially low-grade credit bonds.

Which funds are suitable to buy during the epidemic?

The pharmaceutical sector has always had a long-term investment logic, whether it is the rigid demand of the industry or the continuous creative demand of technology. In the current epidemic situation, the pharmaceutical industry is also the biggest beneficiary. After the outbreak of the epidemic, the social significance of the medical industry will also be paid more attention and receive higher investment from the country.

Another sector is technology. Technology has medium- and long-term development potential. Every crisis may bring about new giants. This epidemic may also quickly promote the advancement of various systems such as big data from the government to the private sector, and accelerate the modernization and IT construction of various systems in Chinese society.

At the same time, you can also pay attention to short-term bonds, pure bonds or secondary bond funds, etc. Under the impact of the epidemic, the "Central Bank" released a certain amount of liquidity hedging through open market operations, which is beneficial to the investment opportunities of bond varieties in terms of fundamentals.