Renminbi funds are divided into foreign-funded RMB funds and domestic-funded RMB funds. Foreign-funded RMB funds are partly funded by foreign investors, but when investing in China, as its literal meaning indicates, sources of RMB, domestic-funded RMB funds and US dollar funds are used.

(2) RMB funds and US dollar funds are based on different legal foundations.

The establishment of RMB funds shall be governed by the laws of China; The establishment of the US dollar fund shall be governed by the laws of the United States or Cayman Islands, British Virgin Islands and other jurisdictions.

(3) The investment restrictions of RMB funds and US dollar funds are different.

The US dollar fund's investment in China enterprises is restricted by the Catalogue of Industries for Foreign Investment, and some areas cannot be controlled or invested; The investment direction of foreign-funded RMB funds is still restricted by the Law on Enterprises with Foreign Investment, while the investment direction of domestic-funded RMB funds is the same as that of other domestic-funded companies, with fewer restrictions and more flexibility.

(4) The exit paths of RMB funds and US dollar funds are different.

Dollar funds usually set up an offshore holding structure when investing, and when exiting, they will list the invested enterprises on overseas exchanges or transfer the equity of overseas holding companies; Renminbi funds usually seek listing in China, or transfer equity or assets in China.

(5) RMB funds and US dollar funds enjoy different tax preferences.

The biggest problem of RMB funds is that they can't enjoy full tax benefits like US dollar funds, and some RMB funds still face double taxation problems because of the lack of convergence of laws.

(6) RMB funds have been legally recognized for only a few years, and most of the investment projects are still in maturity, and there are not many cases of withdrawal. Compared with the "double-headed" dollar funds, it will take time to test whether the more localized RMB funds can achieve brilliant success like some dollar funds under the approval system (although many traders come from these dollar funds). However, with the reputation of China Stock Exchange damaged and China tightening its overseas listing policy, it is also worth observing whether the US dollar fund can replicate its previous success.