As an important asset allocation, equity investment funds have the following characteristics:

1. The investment cycle is long and the liquidity is poor.

Since equity investment funds mainly invest in the equity of unlisted companies or the non-publicly traded equity of listed companies, it usually takes 3-7 years to complete the whole investment process and thus withdraw, so equity investment is called "patient capital". In addition, the liquidity of the fund share of equity investment funds is poor, so it is difficult to transfer the fund share or withdraw investors before the fund liquidation.

2. More resources are invested in post-investment management.

Equity investment is a "value-added" investment. Fund managers usually invest a lot of resources in the post-investment management stage. On the one hand, they provide all kinds of commercial resources and management support for the invested enterprises to help them develop better; On the other hand, by participating in the shareholders' meeting and the board of directors of the invested enterprise, the invested enterprise can be effectively supervised to deal with the information asymmetry of the invested enterprise and the moral hazard of the enterprise management.

3. Strong professionalism

The investment decision and management of equity investment funds involve many aspects such as enterprise management, capital market, finance, industry and law. The characteristics of high returns and high expected risks also require fund managers to have a high professional level, especially to have a unique vision to discover the potential investment value, and to have the experience and ability to help the invested enterprises establish, develop and grow. Therefore, equity investment funds need higher professionalism, more investment experience accumulation, team training and construction, showing obvious intelligence-intensive characteristics. Human capital plays a decisive role in the successful operation of equity investment funds.

Due to the high professional requirements of equity investment fund management, equity investment funds in the market usually entrust professional institutions to manage them, and give more recognition to the value of fund managers in the interest distribution link. Within the fund management organization, it is also necessary to establish an effective and sufficient incentive and restraint mechanism for investment management team members.

4. The income fluctuates greatly.

In the whole financial asset category, equity investment funds belong to the asset category with high risk and high expected return. High risk is mainly reflected in the great uncertainty of investment project income. Venture capital funds usually invest in early and medium-term growth enterprises, and the income of investment projects fluctuates greatly. Some investment projects will suffer principal loss, while others may bring huge profits. M&A funds usually invest in reconstruction enterprises that are in trouble and therefore undervalued, and the income fluctuation of investment projects is also uncertain.