Compared with traditional trust products, fund-based trust products have the characteristics of funds. We can define a fund trust or this product called a trust fund as a collective trust product. Trust companies accept funds or other property entrusted by clients, set up trusts or trust plans, and make diversified investments according to the principle of combination. The profits obtained are shared by investors in proportion to their capital contributions, and they bear corresponding risks.
Based on modern portfolio theory, fund trust products achieve better risk-return objectives than single asset investment through a portfolio composed of several assets. Broadly speaking, trust products with more than two investment targets can be called fund-raising products, but whether it can achieve the expected goal of diversifying risks and optimizing allocation in portfolio investment requires careful evaluation. At present, many funded trust products on the market are similar to industrial funds and focus on a certain industry or market field. But in the long run, on the premise of fully improving the self-management ability, giving play to the cross-market functional characteristics of trust is its advantage different from other fund products. So, what are the classifications of trust funds?
Funds have broad and narrow definitions. Fund in a broad sense is the general name of institutional investors, including trust and investment funds, unit trust funds, provident funds, insurance funds, retirement funds and funds of various foundations. Funds in the existing securities market, including closed-end funds and open-end funds, have the characteristics of income function and value-added potential. From the accounting point of view, capital is a narrow concept, which refers to funds with specific purposes and uses. Because the investors of government agencies and institutions do not require investment returns and investment recovery, but require funds to be used for designated purposes in accordance with the law or the wishes of the investors, funds are formed.
The design of trust products is supported by funds, and professional investment consultants or professionals are introduced to manage and operate the trust products during their existence. Different from traditional trust products, fund-allocated trust products are managed and operated by a professional investment team as a whole, and the "fund pool" raised by products issued in different periods is planned and arranged reasonably, which conforms to the concept of "don't put eggs in the same basket" that is often said in the portfolio. Form a streamlined and professional management model, while the traditional trust is only a single investment or a small scale, so the managers of fund-allocated trust products need higher professional skills to ensure the interests of investors.