I. What is the FOF-LOF Act?
1. Simply put, FOF-LOF is a FOF fund that can be listed and traded, and has the product advantages of both FOF and LO. FOF (fund in fund) is selected by professional managers, and investing in FOF is equivalent to investing in multiple funds at the same time. According to the regulations of the CSRC, FOF needs to invest more than 80% of its fund assets in the fund shares approved or registered by the China Securities Regulatory Commission according to law. At the same time, it is stipulated that the market value of a single fund held by FOF shall not be higher than 20% of its net asset value.
2. According to the FOF-LOF Declaration, products with a closed period of one year account for the majority. In addition, there are FOF-LOF products with 3-month, 6-month, 2-year and 3-year closures. For example, Cathay Pacific has a 3-month closed operation hybrid (FOF-LOF) and a 6-month regular opening hybrid (FOF-LOF), Guangfa preferably has a 2-year closed operation hybrid (FOF-LOF), and Xing Zheng Global has a 3-year closed operation hybrid (FOF-LOF).
Secondly, what will happen when ETF meets the FOF-LOF bill?
1. According to the different investment targets, FOF-LOF can be divided into two types: one is ordinary FOF-LOF, which mainly allocates ordinary funds and usually invests in various ordinary fund products with no less than 80% positions; The other is FOF-LOF, which invests in ETFs, and usually invests in ETFs with no less than 80% positions.
2. The full name of 2.ETF is transactional open index fund, which tracks the changes of the "underlying index" and is listed and traded on the stock exchange. Investors can also buy and sell ETFs like stocks. As an efficient and convenient investment tool, it has developed rapidly in recent years. The FOF-LOF of investing in ETF has two advantages: first, the investment product is ETF, which has low cost and convenient transaction; Second, better liquidity and flexible strategy adjustment. The market is unpredictable, and the rotation of plates and styles is accelerating. Ordinary investors can keep up with market changes, adjust their investment strategies in time and get returns. Ordinary funds generally wait until around 9 pm to announce the net value of the fund on that day, and FOF then announces its net value according to the change of the net value of the invested fund, which is relatively lagging behind. Like stocks, ETFs can directly see the price changes before closing, so the FOF-LOF of investing in ETFs can be valued by the closing price of ETFs, so that everyone can respond in time and improve the efficiency of capital utilization. Therefore, it can also be said that investing in the FOF-LOF of ETF not only solves the problem of "base selection+timing" when investors shock the market, but also solves the liquidity problem that ordinary FOFs cannot be sold during the lock-up period.