In the big concept of fund, we always hear two words, the priority of fund and the inferiority of fund. So what do these two words mean and what role do they play in the fund? Let's have a look.

What are priority and secondary?

Also known as graded products, under a portfolio, two or more levels of risk expected returns are formed by decomposing the expected returns or net assets of the products, and their performance has a certain differentiated product share.

In order to meet the different needs of investors, priority applies to investors with fixed expected returns and low risk tolerance, and often has agreed expected returns; Secondary investors are those who expect to increase their investment capital through financing, and then obtain excess expected returns, and have a higher risk expected return preference.

What's the difference between priority and sub-priority?

Judging from the expected rate of return

The priority will remain relatively certain and the expected rate of return with an upper limit; However, the inferior level has no clear expected rate of return target. In the simplest structure of priority and inferior level, after paying the expected income of priority, the remaining expected income generated by product investment belongs to inferior level.

From the perspective of risk

When the investment loses money, it will be absorbed by the next level first. If the next level loses money completely, it will lose its priority. Therefore, from the perspective of risk, the secondary level represents the level with the highest risk, while the priority level is the level with relatively low risk.

To sum up, the priority risk is small and the expected income is relatively fixed; The risk of inferior level is greater, but the expected return is also higher.

That's all a matter of priority and inferiority. Everyone should have their own considerations, hoping to help you. Warm reminder, financial management is risky and investment needs to be cautious.