The advantages of FOF are: higher income and compensation mechanism.
On the one hand, FoF binds multiple funds together, and investing in FOF is equivalent to investing in multiple funds at the same time, but the cost of individual investment is greatly reduced;
On the other hand, unlike pure sales plans such as fund supermarkets and fund bundle sales, FOF completely adopts the legal form of funds and operates according to the operation mode of funds; FOF includes the long-term investment strategy of the fund market. Like other funds, it is a financial tool that can be invested for a long time.
Classification of FOF funds
First, if it is distinguished by investment targets. According to Item 4 and Item 5 of Article 30 of the Operation Management Measures, FOF can be subdivided into pure FOF and impure FOF. The former only buys funds, or the proportion of investment funds is not less than 80% of the fund assets. Then a small part of the extra funds, that is, below 15%, can buy some other kinds of securities in a small proportion, such as stocks and bonds. We might as well call this part of FOF a secondary FOF. Non-pure FOF means that funds, stocks and bonds can be bought, and the proportion space of large-scale asset allocation is completely stipulated in the fund contract, which is the future hybrid fund, and its investment target can include funds.
Secondly, according to the ownership of investment funds, FOF can be subdivided into three categories: internal FOF, external FOF and mixed FOF. Internal FOF, as its name implies, only buys its own company's fund; External FOF, as the name implies, of course, only buys funds from other fund companies; Mixed FOF means that no matter you, me or him, as long as it is a suitable fund, you can buy it.
Thirdly, according to the different types of funds invested, FOF can be subdivided into stock FOF, bond FOF, currency FOF, hybrid FOF, index fund FOF, QDII-FOF and so on. Not less than 80% of the fund assets in the stock FOF investment target will be invested in stock funds; No less than 80% of the fund assets in the bond FOF investment target will be invested in bond funds; Not less than 80% of the fund assets in the monetary FOF investment target are invested in the monetary fund; Not less than 80% of the fund assets in the index FOF investment target will be invested in index funds; QDII-FOF's investment target will have no less than 80% of fund assets invested in QDII funds; In the investment target of hybrid FOF, no less than 80% of the fund assets are invested in hybrid funds, or all kinds of funds can invest.
Fourthly, according to different investment strategies, FOF can be subdivided into active FOF, passive FOF and mixed FOF * *. Active FOF refers to the FOF products that the active strategy will invest in; Passive FOF refers to FOF products that will adopt passive strategy for investment; Hybrid FOF is a product that can be used for both of the above strategies, such as fund index enhanced FOF and "core-satellite" strategy FOF.
5. According to the different trading places of investment targets, FOF can be subdivided into on-site FOF, off-site FOF and mixed FOF * *. On-site FOF refers to FOF products that subscribe, purchase and redeem funds only through over-the-counter transactions; Over-the-counter FOF refers to FOF products, such as ETFs and graded funds, that only buy and sell funds on the market. Hybrid FOF refers to FOF products that can be subscribed, purchased, redeemed and traded through the above two channels, such as arbitrage transactions commonly used in professional investment ETFs and graded funds.