What does a contractual fund mean?
According to the classification of legal status, funds can be divided into contract funds and corporate funds, and the so-called contract funds are actually closed-end funds and open-end funds that we come into contact with every day.
Take the hybrid securities investment fund with a holding period of two years as an example;
Investors are: users who buy funds;
Manager: Guangfa Fund Management Co., Ltd.;
Custodian: China Industrial and Commercial Bank of China Limited;
Therefore, when we buy a fund, the funds will be directly transferred to the custodian bank, and the fund company is only responsible for issuing operating instructions for buying and selling, and will not directly contact the users' funds, so these three forms a contract.
What are the characteristics of contract funds?
The characteristic of contract funds is that because the fund manager can't directly contact the funds, there will be no situation in which the fund manager takes away the users' funds. Even if it goes bankrupt because of poor management, it will not affect the safety of users' funds, because the funds are entrusted to the bank.
Secondly, it is worth noting that investors of contractual funds have no decision-making power and discourse power on how the fund operates. If you feel dissatisfied, you can choose to redeem, but you can't ask the fund manager how to operate.