Usually, in the prospectus of each fund, it is clearly stipulated that when the loss ratio of the fund reaches a certain level, it will be liquidated, so it is unlikely to fall to 0 yuan.

According to different investment objects, we can divide funds into stock funds, bond funds, monetary funds and hybrid funds.

1, equity fund

Let's talk about equity funds first. According to the classification standard of China Securities Regulatory Commission, more than 80% of fund assets are invested in stocks. Equity funds invest in stocks in a high proportion, so this kind of fund has the highest risk among all fund types, but it also has the highest long-term income.

Simply put, we will call those undervalued stocks value stocks, and those stocks with good development prospects and rapid profit growth as growth stocks. Then, there are value stock funds with value stock investment as the mainstay, and growth stock funds with growth stock investment as the mainstay.

Balanced stock funds refer to funds that invest in value stocks and growth stocks. Because the nature of investing in stocks is different, the risks are also different. According to the degree of risk from low to high, the value stock fund has the lowest risk, the balanced stock fund has the middle risk, and the growth stock fund has the highest risk, but its long-term return is also the highest.

2. Monetary funds

Then talk about the stock fund with the greatest risk, and then talk about the monetary fund with the least risk. Money fund refers to a fund that invests in the money market. What is the money market?

Generally speaking, we call the financial market with an investment period of less than one year as the money market, and the investment varieties mainly include short-term bank deposits, short-term bonds issued by the state and enterprises within one year and so on. These investment varieties can better ensure the safety of the principal, and also determine that the risk and long-term income of the money fund are the lowest among all kinds of funds.

The income of money funds will be higher than that of bank demand deposits in the same period, and the current yield is generally 3%-4% annualized. Because the investment is in wealth management products within one year, the liquidity of money funds is very strong, and most money funds support the same-day redemption.

3. Bond funds

Before talking about bond funds, let's talk about what bonds are. Bonds are a bit like IOUs for friends to borrow money. The IOU says when it will be paid off and what the interest is. But unlike IOUs, bonds are issued by institutions to raise funds. According to the different issuers, bonds are subdivided into government bonds, financial bonds and corporate bonds.

According to the classification standard of CSRC, funds with more than 80% assets invested in bonds are bond funds. Generally speaking, the long-term return of bond funds is higher than that of money funds. Compared with stock funds, bond funds have lower returns, but when the stock market fluctuates violently, the returns of bond funds are relatively stable.

4. Hybrid funds

Let's look at hybrid funds. Hybrid funds can invest in stocks, bonds and money markets, and the ratio of stocks to bonds is not strictly limited. This makes hybrid funds very flexible, and fund managers can adjust their investment strategies according to market changes. When the stock market rises, it can increase stock investment and reduce the allocation ratio of bonds in order to obtain greater investment income; When the stock market falls, it can operate in the opposite direction, increase the investment ratio of bonds and avoid the high risk of the stock market.