The so-called private equity funds refer to funds established to raise funds from a small number of institutional investors through non-public means. Since the sales and redemptions of private equity funds are conducted through private negotiations between fund managers and investors, it is also called a fund that raises funds from specific targets.

Compared with public funds such as closed funds and open-end funds, private equity funds have very distinctive characteristics, and it is these characteristics that give them advantages that public funds cannot match.

First of all, private equity funds raise funds through non-public means. In the United States, public funds such as mutual funds and pension funds generally advertise on the public media to attract customers. However, according to relevant regulations, private equity funds are not allowed to use any communication media to advertise. Their participants mainly rely on the obtained The so-called "reliable investment information", or direct knowledge of the fund manager to join.

Secondly, in terms of fundraising targets, private equity funds only target a small number of specific investors. Although the circle is small, the threshold is not low. For example, in the United States, hedge funds have very strict regulations for participants: if you participate in the name of an individual, your personal annual income in the past two years must be at least US$200,000; if you participate in the name of a family, your family’s income in the past two years must be at least US$300,000. Above USD; if participating in the name of an institution, its net assets must be at least USD 1 million, and there are corresponding restrictions on the number of participants. Therefore, private equity funds have highly targeted investment goals and are more like investment service products tailored for middle-class investors.

Thirdly, unlike the strict information disclosure requirements of public funds, private equity funds have much lower requirements in this regard. In addition, government supervision is correspondingly looser. Therefore, the investment of private equity funds is more hidden and the operation is more complicated. It is more flexible and has a correspondingly greater chance of obtaining high-yield returns.

In addition, a significant feature of private equity funds is that fund sponsors and managers must invest their own funds in fund management companies. The success of fund operations is closely related to their own interests. Judging from the current international practice, fund managers generally hold 3% to 5% of the shares of the fund. Once a loss occurs, the shares owned by the manager will first be used to pay participants. Therefore, the promoters of private equity funds , the manager and the fund are interdependent, and share the same interests of honor and disgrace. This also to a certain extent better solves the inherent interests of managers of public funds

Disadvantages such as weakened constraints and insufficient incentive mechanisms.