A beginner's knowledge of fund investment

A fund is a narrow concept, which means funds with specific purposes and uses. The funds we mentioned mainly refer to securities investment funds. So what should we know about the beginner's fund? Xiaobian has compiled the introductory knowledge of fund investment here for your reference. I hope everyone will gain something in the reading process!

1. What is a money market fund?

according to the measures for the administration of the operation of securities investment funds, money market funds only invest in money market instruments. Money market funds mainly invest in cash, bank time deposits and certificates of deposit within one year (including one year), bonds with remaining maturity within 397 days (including one year), bond repurchases with maturity within one year (including one year), central bank bills with maturity within one year (including one year), and money market instruments with good liquidity recognized by China Securities Regulatory Commission and China People's Bank. At the same time, money market funds may not invest in stocks, convertible bonds, bonds with a remaining maturity of more than 397 days, corporate bonds with a credit rating below AAA, and other financial instruments prohibited from investment by the China Securities Regulatory Commission and the People's Bank of China.

2. What is growth funds?

the growth investment fund is a fund with long-term capital appreciation as its investment objective, and its investment targets are mainly the stocks of small companies and some emerging industries with great appreciation potential in the market. Generally speaking, such funds seldom pay dividends, and often reinvest the dividends, bonuses and profits from their investments to realize capital appreciation. The expected risk-return level of such funds is high.

3. What is an income fund?

Income-based investment funds aim at pursuing the current income of the fund, and their investment targets are mainly those securities with relatively stable income, such as blue-chip stocks, bonds and negotiable certificates of deposit. Income-based funds generally distribute the interest and dividends earned to investors. The expected risk-return level of such funds is low.

4. What is a balanced fund?

Balanced funds are funds that pursue both long-term capital appreciation and current income. These funds mainly invest in bonds, preferred stocks and some common stocks. These securities have a relatively stable portfolio ratio. Generally, 25%-5% of the total assets are used for preferred stocks and bonds, and the rest are used for common stock investment. Its expected risk and return are between growth funds and income-based funds.

5. What is an index fund?

index fund refers to a fund that buys all or part of the securities in the securities market included in an index according to the standard of an index, and its purpose is to achieve the same income level as the index. The main features are: 1. Low cost; 2. Dispersing and preventing risks; 3. Delaying tax payment; 4. Less monitoring, and these advantages can be more prominent in a long period of time. In addition, the simplified portfolio will make it unnecessary for fund managers to contact brokers frequently, or to choose stocks or determine market timing.

6. what is an ETF?

ETF (Exchange-traded Fund) is an open-end fund with variable fund share. ETF combines the operating characteristics of closed-end funds and open-end funds. Investors can not only buy and sell in the secondary market of the exchange like closed-end funds, but also purchase and redeem like open-end funds. In the primary market, large investors can exchange a package of shares for shares (subscription) and share for a package of shares (redemption), and it is difficult for small and medium investors to participate. In the secondary market, both large investors and small investors can trade ETF shares at market prices. ETF tracks a selected index, which is essentially an index fund. Compared with traditional index funds, ETF is more convenient to buy and sell (it can be bought and sold at any time during trading hours) and the cost is lower.

7. what is LOF?

LOF (listed open-end fund) is an open-end fund that can purchase and redeem fund shares in the OTC market and trade fund shares in the exchange (on-market). Different from ETF, the subscription and redemption of LOF are all transactions between fund shares and cash, which can be carried out at consignment outlets; The purchase and redemption of ETF is the transaction between fund shares and a basket of stocks, and it is carried out through the exchange.

8. what is FOF?

fof (fund) is a fund that invests in other securities investment funds, and therefore indirectly holds securities assets such as stocks and bonds. On the one hand, FOF "bundles" multiple funds together, and investing in FOF is equivalent to investing in multiple funds; On the other hand, FOF operates completely according to the fund operation mode. Like other funds, it is a financial instrument that can be invested for a long time.

9. what is a series (umbrella) fund?

umbrella fund, also known as series fund, refers to the establishment of several sub-funds under a parent fund, and each sub-fund makes investment decisions independently. The main feature is that it can provide investors with a variety of investment options within the fund. Because the market is constantly changing, the needs of investors are constantly changing. If investors choose between different funds again, they need to pay a lot of sales expenses. However, investors of umbrella funds can switch fund types at any time according to their own needs, without paying the switching fee, which can provide investors with greater choice at low cost. In essence, the umbrella fund is just an organizational form of the fund.

1. What is principal guaranteed fund?

a capital preservation fund refers to a fund in which an investor can recover at least a certain agreed percentage of the investment principal when the investment contract expires. The investment target in principal guaranteed fund is usually an investment tool with low risk and relatively little profit.

11. What is Public Offering of Fund? What is a private equity fund?

Public Offering of Fund refers to a kind of fund that can be publicly offered to the public. Private equity fund is a fund that can only be raised and sold to specific investors in a non-public way. Compared with Public Offering of Fund, private equity funds cannot be publicly sold and promoted, and the investment amount is high, and the qualifications and number of investors are often strictly limited. In addition, unlike Public Offering of Fund, which must abide by the laws and regulations of the fund, accept the strict supervision of the regulatory authorities, and regularly disclose information, private equity funds have greater flexibility in operation and are subject to fewer restrictions and constraints. It can not only invest in derivative financial products, buy short and sell short, but also speculate on exchange rate and commodity futures investment. The investment risk of private equity funds is high, mainly targeting the wealthy class with strong risk tolerance.

12. what is an active fund?

active fund is a kind of fund whose performance tries to exceed the performance benchmark, and its expected risk and return level are higher than passive fund.

13. what is a passive fund?

a passive fund is a fund that does not actively seek to outperform the market, but tries to replicate the performance of the index in order to obtain the average market return for a long time. Passive funds generally choose a specific index as the tracking object, so index funds are usually passive funds.

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