What is a fund?
Generally speaking, the securities investment fund is an investment tool that collects the funds of many investors and gives them to the bank for safekeeping, and the professional fund management company is responsible for investing in stocks, bonds and other securities in order to maintain and increase the value. The biggest advantage of buying a fund is to participate in the stock and bond market investment with the wisdom of experts, reduce the risk of personal direct investment in stocks and bonds, achieve the purpose of personal asset appreciation, and finally achieve your financial goals such as retirement and children's education.
Fund classification
According to different classification standards, funds can be divided into different types, and according to whether the fund scale can change at any time, it can be divided into open-end funds and closed-end funds. According to the different proportion of asset allocation, it can be divided into money market funds, bond funds, stock funds, index funds and capital preservation funds.
The meaning of open-end fund and closed-end fund
According to whether the fund can be redeemed, the fund can be divided into open-end fund and closed-end fund.
Closed-end fund refers to a fund whose total amount of issuance is determined in advance and the total size of the fund remains unchanged. After the fund is listed, investors transfer and buy and sell it through the securities market (usually an exchange).
Open-end fund refers to a fund whose total amount of issuance is not fixed, and its scale can be increased or decreased at any time after issuance, and investors can purchase and redeem it in the business place stipulated by the state according to the net value of the fund.
Whether at home or abroad, open-end funds have become the mainstream of the market. The main reason is that open-end funds provide investors with the convenience of subscription and redemption at any time, and the price is based on the net value of funds, which is relatively fair regardless of market supply and demand. The difference between open-end fund and closed-end fund
The variability of fund size is different. Closed-end funds usually have a fixed closed-end period (not less than 5 years in China), during which the fund shares issued cannot be redeemed and the fund scale is fixed; However, the open-end fund has no fixed term, and investors can redeem or buy fund shares from the fund manager at any time, resulting in the constant change of the total assets of the fund every day.
The transaction forms of fund units are different. The fund shares of closed-end funds cannot be redeemed during the closed period, and the holders can only sell them to other investors on the stock exchange. Investors of open-end funds can apply to fund managers or intermediaries for subscription or redemption at any time within a period of time (mostly 3 months) after the end of the initial offering.
The transaction price calculation standards of fund units are different. The buying and selling price of closed-end funds is determined by the company's net asset value, and is also affected by the relationship between market supply and demand. Therefore, there will be discounts and premiums on the basis of unit net asset value. The transaction price of open-end funds depends on the net asset value of the fund unit. Its selling price, that is, the buying price, is generally the net asset value of the fund unit plus a certain subscription fee, while the buying price is the redemption price, which is the net asset value of the fund unit minus a certain redemption fee, and is basically unaffected by market supply and demand.
Different investment strategies. The fund share of a closed-end fund cannot be redeemed, so the fund can make long-term investment in the raised funds, and the investment portfolio of the fund assets can be effectively carried out within the predetermined plan. Open-end funds can be redeemed at any time. In order to cope with investors' redemption at any time, all fund assets cannot be used for investment, let alone for long-term investment. It is necessary to maintain the liquidity of fund assets and keep some cash and popular financial assets in the portfolio.
How do novices invest in funds? What are the advantages of open-end funds?
High transparency. Open-end funds disclose the net asset value of fund units every day, which accurately reflects the true value of fund operation.
Good liquidity. Investors can purchase and redeem at any time according to the net asset value of the fund unit to avoid the discount risk. On the other hand, in order to meet the redemption needs of investors, fund managers will not hold assets that are difficult to realize, making portfolio liquidity better than closed-end funds.
Better customer service. After investing in open-end funds, you can enjoy a series of services provided by fund companies or distributors, such as account inquiry and financial consultation, which closed-end funds do not have.
For an ordinary investor who lacks investment experience and has no professional training, it is difficult to improve his ability of stock selection and timing in a short time. Because even fund managers can hardly make mistakes in stock selection and timing.
How do novices invest in funds? Stock picking ability and timing ability are two important aspects to evaluate investment ability. The so-called stock picking ability refers to the ability of investors to predict individual stocks, which can buy undervalued stocks and sell overvalued stocks. The so-called timing ability refers to the ability of investors to predict the overall trend of the market. In a bull market, more funds can be used to buy stocks, and in a bear market, the proportion of cash assets can be increased.
China A-share market is a new capital market. One of its characteristics is that the stock price cannot reflect all the information that affects the price. The trust of fund managers as institutional investors is based on the assumption that fund managers can obtain more private information than the general public, or they can make better use of their unique analytical techniques to process and utilize public information. With this analytical ability, information advantage and good judgment, they can identify mispriced stocks, and buy "undervalued" stocks and sell "overvalued" stocks to obtain stocks that exceed the market average. This is also the most important reason why fund managers with excellent investment ability are sought after by the people.
Therefore, investors with weak timing ability should pay more attention to actively managed stock funds. How do novices invest in funds? Regular fixed investment is also a good way. In the volatile market, actively managed funds can make use of their own flexibility and the characteristics of emerging A-share markets to create returns beyond the index. Because the performance of active funds is closely related to the ability of fund managers to choose stocks and industries. There are many fund managers with deep qualifications and strong bottom-up stock selection ability. Compared with ordinary individual investors, they have experienced bull-bear market rotation and have more experience in grasping the growth and value of individual stocks.
How do novices invest in funds? Some individual investors see that index funds have performed well in the recent rebound, but in fact, for investors with poor risk tolerance and timing ability, index funds are not suitable as the main investment targets, but can be used as one of the varieties of asset allocation. Because the choice of index funds emphasizes the judgment of macro-economy and industry, which is equivalent to predicting the future trend of the whole market, and has little to do with the ability of fund managers. If individual investors use index funds as a tool for short-term arbitrage, the risk is even greater. The consequences of individual investors' participation in short-term operations without reasonable judgment on market expectations are often chasing up and killing down, which may run counter to the original intention of "buying low and selling high".