To put it simply, "umbrella fund" means that several sub-funds use an umbrella on it, and this umbrella is the fund contract. For example, three industry funds in Cai Xiang Hefeng, which have been approved for issuance, have adopted this organizational structure. It consists of three funds: value optimization growth, cycle and stability; However, the organizational structure of a single fund is relatively simple and there are separate fund contracts. See the following figure for the difference between the two organizational structures:
Umbrella fund is essentially an open-end fund management model. Under this structure, fund sponsors initiate the establishment of many funds, which can be converted according to the general fund prospectus and the prescribed procedures and rates. These funds are called "sub-funds" and can make independent investment decisions according to different investment policies and investment objectives, such as bonds, index funds and stock funds. The fund system composed of these sub-funds is called umbrella fund.
Umbrella funds that have been reported to the CSRC for approval, such as the umbrella fund of Rongtong Fund Management Company, are set as bond funds, passive stock index funds and active stock funds; Umbrella funds designed by China Merchants Fund Management Company include money market sub-fund, bond sub-fund, balance sub-fund and stock sub-fund.
Characteristics of umbrella fund
For investors, investing in umbrella funds mainly has the following advantages:
Low management fees charged: As all the sub-funds under the umbrella fund operate under the same management framework, it can highlight the characteristics of large scale, complete quality and unified management of the fund, so that the umbrella fund can enjoy economies of scale in custody, audit, legal services and management fees, reduce management costs and broaden the downward space for the fund to collect management fees.
Investors can easily switch between sub-funds under umbrella funds: umbrella funds can provide investors with a variety of investment options, and investors can easily choose and switch different sub-funds according to changes in market conditions.
The conversion cost between sub-funds is low. The conversion between single funds usually takes at least one week from applying for "endorsement" on the unit warrant to receiving the redemption money, and the conversion into a new fund requires a considerable initial subscription fee; Investors of umbrella funds can switch fund types at any time according to their own needs, with short time and low switching cost.
Investment skills
First of all, we must understand our investment attributes and risk tolerance. The fund does not guarantee absolute returns and has certain risks. Therefore, the most important thing is to understand the risk/return characteristics of each sub-fund of the umbrella fund according to your own financial needs, and you can focus on factors such as the total return rate of the fund and the cost of the fund.
Secondly, according to the background, investment philosophy, internal system, market image, historical performance of its funds, staff quality and customer service of each fund management company, a comprehensive analysis is made to select a fund management company that is trustworthy and conforms to its own investment style. This is particularly important, because one of the benefits of umbrella funds is that it is convenient for investors to switch between sub-funds. If the fund manager lacks good professional quality, then it is unnecessary to switch between sub-funds, and its advantages naturally cannot be reflected.
Third, understand the investment style of each sub-fund of umbrella fund, so as to switch between sub-funds with different investment objectives according to market characteristics, risk preference and asset status. For example, when the stock market is adjusted, it can turn to bond sub-funds with stable returns; If you have more funds, you can turn some of them into value-added sub-funds and get a richer return on investment.
Finally, investors need to be reminded that the differences in investment objectives and styles of sub-funds of umbrella funds provide investors with more investment choices, and their advantages are based on relatively developed capital markets. At present, under the condition that our wealth management products are relatively simple, it is necessary to carefully identify the differences between sub-funds, which is also the key to choosing umbrella funds.