I. What is a fund
Funds have broad and narrow definitions. Fund in a broad sense is the general name of institutional investors, including trust and investment funds, unit trust funds, provident funds, insurance funds, retirement funds and funds of various foundations. Funds in the existing securities market, including closed-end funds and open-end funds, have the characteristics of income function and value-added potential. From the accounting point of view, capital is a narrow concept, which refers to funds with specific purposes and uses. Because the investors of government agencies and institutions do not require investment returns and investment recovery, but require funds to be used for designated purposes in accordance with the law or the wishes of the investors, funds are formed.
Two. Types of funds
Although there are many kinds of open-end funds, they can be roughly divided into the following four basic types according to the investment purpose, investment target and investment strategy:
1. Equity funds: mainly invest in stocks, with high risks and high returns.
2. Mixed funds: Diversified investment in stocks, bonds and money market instruments, with moderate risk and return levels.
3. Bond funds: mainly invest in bonds for the purpose of obtaining fixed income. The risks and benefits are much smaller than those of equity funds.
4. Money market funds: Only invest in money market instruments, with stable returns and extremely low risks.