In the field of financial investment, bond fund is a relatively stable investment method. For ordinary investors, the cost of bond funds is hard to understand. This paper will take the bond fund fee as the theme, and elaborate in detail from three aspects: fund operation mechanism, fee types and fee calculation methods.
I. Operating mechanism of the Fund
Bond fund is a collective investment tool issued by fund companies. It collects investors' funds, and then buys certain bonds in proportion to achieve the purpose of asset custody, risk diversification and stable income. The fund company is the manager of the bond fund, responsible for the investment and operation of the fund, and will also charge a certain fee.
Second, the cost type
The expenses of bond funds mainly include management fees, custody fees and sales service fees. Among them, the management fee is the fee charged by the fund company for managing and operating the fund; Custody fee is the fee charged by the fund custodian bank for managing and keeping the fund assets; The sales service fee is the fee charged by the intermediary of the sales fund. These expenses will directly or indirectly affect the income of investors.
Third, the cost calculation method
There are two ways to calculate the fund's expenses, one is the front-end expenses and the other is the back-end expenses. Front-end charge means that investors need to pay a certain fee when purchasing funds, which will be deducted directly from the investors' purchase funds; Back-end fees mean that investors need to pay a certain fee when redeeming funds, usually according to the length of holding time.
The cost of bond funds is one of the important factors that affect investors' income. Investors should understand the composition and calculation method of fund cost, and choose the appropriate fund according to their investment needs and risk tolerance. Investors can also choose fund products with lower fees and higher returns by comparing the fees of different fund companies.