As a way of managing money, funds have attracted more and more investors' attention and recognition. However, there are many kinds of funds in the market, which is hard to avoid. So what's the difference between index funds and general funds? How to choose a fund? We have also prepared relevant contents for your reference.

What's the difference between index funds and general funds?

Index fund is a passive management fund. Its investment portfolio is a complete copy of a certain market index, such as SSE 50 and CSI 300, and its investment objective is to track the performance of the index. Index funds have low management cost, high portfolio transparency and scattered risks, which is a good choice for investors who want to obtain average market returns. Ordinary funds are mostly actively managed funds, and their investment portfolios are adjusted by fund managers according to market conditions, fund positions and other factors. The investment goal of ordinary funds is to obtain higher than the market average income, and the investment target and strategy are more free and flexible.

How to choose a fund?

1, define your investment objectives and risk preferences. Different investment purposes and risk preferences determine different investment periods and portfolios. Generally speaking, if the purpose of investment is to obtain short-term income, then you should choose funds with high security, good liquidity and stable income, such as money funds and short-term bond funds. If the purpose of investment is to obtain higher long-term returns, then we should choose funds with moderate risks and higher returns, such as hybrid funds and equity funds, which are suitable for long-term holding.

2. Compare the performance indicators and expenses of different funds. For example, the fund's rate of return reflects how much income the fund has achieved in the past period of time, which can be divided into the rate of return in the past year, the rate of return in the past three years, and the rate of return since its establishment. Generally speaking, the longer the rate of return, the more it can reflect the ability and level of fund managers. Fund expenses reflect the transaction costs required for purchasing and holding funds, which can be divided into subscription fees, redemption fees, sales service fees, etc. Investors should give priority to funds with more favorable rates.