Private equity fund refers to a fund established by raising funds from a few institutional investors in a non-public way. Because the market sales and redemption of private equity funds are based on private consultation between fund managers and investors, they are also called funds for special purposes. So is it risky to invest in private equity funds?

How do private equity funds make profits?

Private equity funds raise funds in a private way. In foreign countries, mutual funds, retirement pension funds and other Public Offering of Fund funds generally advertise according to the published news media to attract customers. According to the relevant requirements, private equity funds are not allowed to use all media to advertise, and their participants are mainly added according to "official investment news" or the way of immediately knowing the fund manager.

In terms of fundraising goals, the goal of private equity funds is only a few special investors, and the social circle is small but not low. Private equity funds have an overall investment goal with a strong purpose, which is more like an investment service product tailored for middle-class investors.

Different from the strict disclosure regulations of Public Offering of Fund funds, the regulations of private equity funds in these aspects are much lower, and the regulatory authorities are relatively loose, so the investment of private equity funds is secret, the operation is more flexible, and the chances of obtaining high returns are greater.

An obvious feature of private equity funds is that fund investors and managers must invest their self-raised funds into fund management consulting companies, and the success of fund operation is closely related to their own rights and interests. Judging from the current international practice, fund managers generally need to own 3%-5% of the fund's rights and interests. In the event of a loss, the equity owned by the manager will be used to pay the participants first. Therefore, investors, managers and funds of private equity funds are shoulder to shoulder, and the rights and interests of * * * are the same fate, which effectively solves the problem that the rights and interests of private equity funds, a rare professional manager, are weakened to some extent.

Investment risk of private equity fund

First, the risk of incomplete information content.

Because private equity funds have strict disclosure regulations, the information content is not completely transparent, which is a great risk for private equity funds. However, it involves the whole process of investment operation and management methods, such as the whole process of investment plan, asset migration, new project tracking management methods, etc., and quite a few meetings are not fully disclosed.

Second, investors' ability to resist risks is low.

Many investors often participate in private equity investment, paying attention to the high returns of private equity funds, but high returns are also matched with high risks, and many investors have relatively strong anti-risk ability, so investment needs to pay more attention to the risks of such private equity funds.

Third, the risk of private placement caused by fund managers.

Due to the lack of strict access conditions for manufacturing industry, there are significant differences in the management level, manufacturing influence and sales market recognition of fund managers. In the same natural environment of the sales market, some fund managers can send profits to investors with accurate investment, while some fund managers will cause damage to investors.