After investors invest in this fund, they can reinvest with the proceeds, and the investment income will accumulate continuously to increase the fund share owned by investors. For example, investors can own 100 fund shares if they invest 100 yuan. After 1 year, if the return on investment is 8%, the investor will have 8 more fund shares, totaling 108, with a value of 108 yuan.
The standard to measure the performance of money funds is the rate of return, which is different from other funds that make profits by increasing their net assets.
Monetary funds have good liquidity and high capital security. These characteristics are mainly due to the fact that the money market is a low-risk and high-liquidity market. At the same time, investors can transfer fund shares at any time as needed, regardless of the date.
The risk of money fund is low. The maturity of money market instruments is usually very short, and the average maturity of money fund portfolio is usually 4 ~ 6 months, so the risk is low, and its price is usually only affected by market interest rate.
The investment cost is low. Money funds usually don't charge redemption fees and have low management fees. The annual management fee of the money fund is about 0.25% ~ 1% of the fund's net asset value, which is lower than the traditional annual management fee 1% ~ 2.5%.
Money funds are all open-end funds. Money funds are usually regarded as risk-free or low-risk investment tools, which are suitable for short-term capital investment in emergencies to earn interest, especially in the case of high interest rate, high inflation rate, reduced liquidity of securities and reduced credibility, which can avoid the loss of principal.