Private equity funds are raised by a few specific investors, including institutions and individuals, and the threshold is generally high, so it is difficult for small and medium investors to participate in private equity funds. At present, the threshold of domestic private equity funds has declined, but it is still around 5000 ~ 65438+ 10,000 yuan.

Public Offering of Fund, on the other hand, is aimed at the general public, with no specific requirements and generally low threshold, which is suitable for mass investors to participate.

(B) different ways of financing

Private equity funds can only raise funds by word of mouth in a non-public way, and cannot publish advertisements in traditional media, but only in disguised form on the Internet.

In Public Offering of Fund, the way to raise funds is open, and all media can be used to publish advertisements, which can be publicly issued and even traded in the primary and secondary securities markets.

In the United States, publicly issued funds, such as mutual funds and pension funds, usually advertise in public media to attract customers. When attracting customers, hedge funds are not allowed to use any media to advertise, and their participants mainly join in the form of so-called "reliable investment news" obtained in the upper class or direct knowledge of a hedge fund manager.

(C) the decision-making mechanism is different

The organization of private equity funds is very simple, including only two roles: one is the general partner who initiates the establishment of hedge funds and is responsible for the daily management and investment decision-making of hedge funds; The second is a limited partner, with a small amount of capital contribution. Moreover, private equity funds often have no board of directors and board of supervisors, and there is no general meeting of shareholders. This avoids overstaffing and improves the management efficiency of investment decision-making, so it has high flexibility.

(d) Different modes of operation

Private equity funds are basically designed by managers themselves. They can adjust their portfolios and change their investment ideas in time according to the requirements of investors and market development trends, and investors can redeem them according to the net value of the funds. Its advantages are that it can be tailored according to the requirements of investors, the funds are relatively concentrated, the investment management process is simple, a large number of financial levers can be used to participate in derivative securities investment, and the yield is high and stable.

However, Public Offering of Fund's investment strategy, investment objectives and investment methods are all regulated, and it can't even use financial leverage to invest in financial derivatives, so its rate of return is generally lower than that of private equity funds, especially when the market situation is not good.

(5) Different performance rewards.

Public Offering of Fund does not extract performance compensation, but only collects management fees. Private equity funds, on the other hand, charge performance compensation and generally do not charge management fees. For Public Offering of Fund, performance is only the honor when ranking, while for private equity funds, performance is the basis of remuneration.

(6) Different compensation mechanisms

The compensation mechanism of private equity funds is flexible and diverse, which is basically negotiated between managers and investors without the approval of others. It is usually linked to investment performance. The higher the investment income, the higher the salary of fund managers, which is convenient to attract outstanding fund managers and management talents to join.

However, Public Offering of Fund's salary mechanism is fixed and not linked with investment performance, which can't attract outstanding investment and management talents.

(7) Different institutional obstacles

(1) Raising funds in the form of private placement can save the issuance cost;

(2) Issuance to specific groups is not limited by the number of shareholders;

(3) A wide range of investment objects can hedge the profit and loss and arbitrage of assets between different markets and different varieties;

(4) financial leverage can be used to amplify income;

(5) We can also bypass some rules and regulations and tax policies, reduce operating costs and avoid taxes legally.

These are all forms of public trust funds, mutual funds and securities investment funds.

(8) Different regulatory mechanisms.

1. The supervision initiated and established is different.

Not all private equity funds do not need approval, at least in the following two cases will involve approval:

Involving overseas strategic investment or mergers and acquisitions: it needs to be approved by the Ministry of Commerce and/or the CSRC;

It involves some special industries: it needs the approval of the industry supervision department, such as holding shares in insurance companies and securities companies. Although it is a private equity investment, it needs the approval of the China Insurance Regulatory Commission and the China Securities Regulatory Commission in advance.

2. The supervision of tax links is different.

According to the rules set by the Internal Revenue Service, investors of private equity funds can generally avoid double taxation. Stamp duty has been abolished, and the income adjustment tax is calculated according to whether it meets the long-term investment conditions (1 year), 50% of profits are included in the tax, and 40% of losses can be deducted from the tax. Short-term investment is only a profit, not a loss. Moreover, the capital gains tax rate is only 15%, while the tax rate of ordinary income is as high as 35%.

3. The supervision of violations is different.

The so-called funds in China should be called securities investment funds accurately, such as Dacheng, Huaxia, Jiashi and Bank of Communications Schroeder. These Public Offering of Fund are strictly supervised by the CSRC, and their investment direction and proportion are strictly restricted. Most of them manage tens of billions of dollars.

Private placement is strictly restricted in China, because it can easily become "illegal fund-raising". The difference between them lies in whether to raise funds for the general public and whether the ownership of funds has been transferred. More than 50 people raise funds and transfer them to personal accounts, which is regarded as illegal fund-raising. Illegal fund-raising is a very serious economic crime that can be sentenced to death, such as Wu Ying in Zhejiang, Tang Wanxin in Delong and Madoff in the United States.

4. The requirements for information disclosure are different.

For the need of supervision, generally speaking, the securities regulatory authorities have very strict requirements on Public Offering of Fund's information disclosure, including its investment objectives, investment portfolio, investment methods, whether to use financial leverage, investment income, manager change, and the number of securities held. The information disclosure requirements for private equity funds are much lower.