Answer: A general view of fund varieties (source of article: Stock Market Horse Economics) According to investment targets, funds can be divided into: 1. Stock funds. The investment target is the stocks of listed companies. The primary benefit is capital gains from the appreciation of the stock. The net value of the fund changes with the rise and fall of the market prices of the stocks invested. The risk is higher than bond funds and money market funds, and the relatively expected returns are also higher. Stock funds can be divided into various industrial funds according to the investment target industry. Common categories include high-tech stocks, biotechnology stocks, industrial stocks, real estate stocks, utility stocks, communication stocks, etc. 2. Bond funds. The investment target is bonds. Interest income is the main source of income for bond funds. Changes in exchange rates and fluctuations in bond market prices also affect the overall fund investment return rate. Usually when market interest rates are expected to fall, bond market prices will rise; when interest rates rise, bond prices will fall. Therefore, bond funds are not guaranteed to make a profit and there are still risks. 3. Money market funds. The investment targets are money market products with excellent liquidity, such as deposits within 365 days, treasury bonds, repurchases, etc., and can earn higher returns equivalent to those enjoyed by large financial transactions. In addition to some of the classification methods introduced above, there are also some special types of funds. The more common ones are: 1. Convertible corporate bond funds. Invest in convertible corporate bonds. Enjoy fixed interest income from bonds when the stock market is down. When the prospect of the stock market is good, it can be converted into stocks according to the originally agreed conversion conditions, which has the characteristics of "advancing to attack and retreating to defend". 2. Index funds. The composition and proportion of individual stocks in the fund's investment portfolio are determined based on the investment target—the sampled constituent stocks and proportions of the market index. The goal is for the fund's net value to closely follow the index performance, without having to consider the investment strategy at all. As long as the index constituent stocks change, the fund manager will change the shareholding proportion accordingly. Due to its simplicity and high investor acceptance, index investment is currently the most commonly used investment method in the U.S. fund system. 3. Fund of funds. As the name suggests, the investment target of this type of fund is a fund, so it is also called a fund of funds. After the fund company collects customer funds, it then invests in funds under its own or other fund companies that currently have the most value-added potential, and then combines them into an investment portfolio. There is currently no such variety in the country. 4. Umbrella funds. The composition of an umbrella fund is that there are a group of sub-funds under the fund that invest in different targets, and the management of each sub-fund is carried out independently. As long as you invest in any sub-fund, you can switch to another sub-fund at will without any additional fees. 5. Hedge funds. This type of fund gives the fund manager full authorization and freedom in the use of funds. The performance of the fund depends entirely on the fund manager's trading skills and his foresight on the subject matter with profit potential. Any investment strategy that the fund manager considers "profitable" can be used, such as taking advantage of the spread between long-term and short-term interest rates; using options and futures indexes to arbitrage in the foreign exchange market, bond market, and stock market. In short, any investment strategy can be used. This type of fund has the highest risk. It is specially issued abroad for people or institutions with high income and high risk tolerance, and generally does not accept retail investment.
(China Investment Morgan Fulinming Fund Management Co., Ltd.)