The concept of fund
Funds can be divided into broad sense and narrow sense. Broadly speaking, a fund refers to a certain amount of funds set up for a certain purpose. Such as trust and investment funds, provident funds, insurance funds, retirement funds and various foundations. People usually refer to funds mainly as securities investment funds. There are three main analysis methods of securities investment: basic analysis, technical analysis and evolution analysis, in which the basic analysis is mainly applied to the value judgment and selection of investment objects, while the technical analysis and evolution analysis are mainly applied to the time and space judgment of specific investment operations as an important supplement to improve the effectiveness and reliability of securities investment analysis.
What are the expenses incurred in the operation of the fund?
Fund operation involves two categories of expenses. One is the subscription fee, redemption fee and fund conversion fee generated in the sales process, which are borne by investors and collected from the subscription, redemption or conversion amount. The other is the expenses incurred in the process of fund management, mainly including fund management fees, custody fees, information disclosure fees, etc., which are borne by the fund assets.
For some funds that do not charge subscription and redemption fees, such as money market funds, part of the fees will be extracted from the fund assets for fund sales and services to the holders.
During the bull market in 2007, many fund investors simply didn't care about the transaction cost of about 2%. Indeed, if you invest in a wealth management product, it will bring a huge income of 50% or even 100% a year. Of course, you don't have to care about the rate. However, after the decline of A-share market in 2008, many investors realized that A-share market is a volatile market. If the annualized rate of return of an investment is only about 10%, the handling fee of 2% is enough for rational investors to pay attention to the relationship between cost and income.
Some experienced fund investors will use fund share conversion or cash dividend reinvestment to reduce the transaction costs of some funds. Because the rate of fund conversion is generally lower than the subscription fee, and dividends are converted into fund shares without subscription fee. In addition, some funds are designed to encourage investors to hold back-end fees for a long time, and investors can find ways to reduce costs according to their own needs.