Let's talk about our previous example. We use the lowercase letter A for those who have spare money, and the uppercase letter A for those who want to open a factory and need to borrow money. A has some spare money in his hand. A just wants to open a factory and is short of money. B also wants to open a factory, and C also wants to open a factory and is short of money. ABC shouted "Lend me the money" to A, saying that their factory is the best and most profitable. After lending me money, the return is the highest. At this time, A was a little confused. He visited the factory of ABC three people and felt that he really couldn't tell good from bad. What should I do? Who should I lend the money to?
A has a good idea. Can we divide the money into three parts and then all three ABC people borrow some? The advantage is that you don't have to rack your brains to compare whose factory is better. No matter whose factory is better, he can earn an average income in the end. Look how simple it is. A smiled from ear to ear, but a new problem came. What will happen when A hears about it? The money that should be lent to me is divided into one third? Sorry, I also have a threshold here. I don't want too little money. (It is very common in reality. For example, the money after the split is not enough to buy a share of company A, see the previous article. What exactly is a stock? ) What should I do? A is anxious again.
At this time, an intermediary organization appeared, and he could find many people who had the same demands as A, bcdef. . . When all their money is collected, it becomes a huge sum, and then it is split up and lent to the Agricultural Bank of China. The huge sum is divided into three parts, and no one at ABC will be too small, and everyone will accept it gladly. This is the end of the whole process.
This intermediary is the fund institution. The person in charge of this huge sum is called the fund manager, and the huge sum gathered by everyone is called the fund. According to the way fund institutions obtain this huge sum of money, they can be divided into Public Offering of Fund and private equity funds; According to whom the fund manager wants to lend this huge sum of money, it can be divided into: money fund, bond fund, stock fund, mixed fund, FOF and so on. According to the fund manager's choice, whether the borrower chooses from the Agricultural Bank of China or the index (what is an index, which will be introduced later) can be divided into active funds and passive funds. There are also many classifications of funds, which will be introduced in detail later.
What is the difference between this fund institution and the intermediary institution mentioned above-the bank? In essence, they borrowed money from Li Si Zhang San. The difference is that banks have a set of strict risk control standards when choosing borrowers, such as credit and qualification. First of all, we must ensure that we can borrow and pay back, and then pursue higher profits. What about the fund institutions? Of course, different funds are different, but generally speaking, compared with banks, they give priority to higher returns and sacrifice risk control appropriately, so generally speaking, the risk of funds is higher than that of bank wealth management and deposits.
What are Public Offering of Fund and private equity funds, and their respective advantages and disadvantages? See you next time!