What are the advantages and disadvantages of investment funds?
Advantages of investment funds
1. Collective investment: The fund skillfully concentrates scattered funds and gives them to professional institutions to invest in various financial instruments in order to increase the value of assets.
2. Diversification of risks: Funds can diversify their portfolios and invest in various securities. By diversifying investment, on the one hand, the advantages of huge capital and numerous investors are used to reduce the investment risks faced by each investor, on the other hand, the complementarity between different investment objects is used to achieve the purpose of diversifying investment risks.
3. Expert management: The Fund implements an expert management system. These professional managers have been specially trained and have rich experience in securities investment and other project investment.
Disadvantages of investment funds
1. Credit risk: including the credit risk of bonds, bills and other instruments invested by the fund itself, as well as the door-to-door risk of investment based on transactions, such as repurchase agreements.
2. Policy risk: Changes in national macro policies, such as fiscal policy, monetary policy, industrial policy, and regional development policy, lead to market price fluctuations, affect fund returns, and generate risks.
3. Economic cycle risk: With the cyclical change of economic operation, the income level of the securities market also changes periodically, and the income level of fund investment will also change accordingly, resulting in risks.
4. Interest rate risk: the fluctuation of interest rate in financial market will lead to the change of price and yield in securities market. Interest rate directly affects the price and yield of bonds and the financing cost and profit of enterprises. The fund invests in bonds and stocks, and its income level may be affected by changes in interest rates.