Although private equity investment can bring high returns, it also has great risks. The following are the risks of private equity funds collected by Bian Xiao. Welcome to read and share. I hope you will like it.

How big is the risk of private equity fund?

1, market risk

The financial market price is influenced by many factors, such as economic factors, political factors, investment psychology, trading system, etc., which leads to changes in the level of fund property returns and risks, mainly including policy risks, economic cycle risks, interest rate risks, operating risks of listed companies, purchasing power risks, etc.

2. Managing risks

In the actual operation process, fund managers may be limited by knowledge, technology, experience and other factors, which may affect their judgment on relevant information, economic situation and securities price trend, and the performance of the investment products they choose may not always be better than other investment products. If the fund manager's judgment on the economic situation and the securities market is inaccurate, the information obtained is incomplete and the investment operation is wrong, it will affect the income level of the entrusted property.

3. Credit risk

The fund may default in settlement during the transaction, or the bond issuer invested by the fund defaults and refuses to pay the due principal and interest, resulting in the loss of planned property. Credit risk mainly comes from counterparties, issuers and guarantors. In the operation of fund property investment, if the manager's credit research level is insufficient and the credit rating of credit products or counterparties is inaccurate, the fund property may suffer losses caused by credit risk.

4. Liquidity risk

The liquidity of the securities market is influenced by many factors, such as price, investment groups and so on. Under different conditions, its liquidity performance is unbalanced, which shows that in some periods, transactions are active and liquidity is good, while in other periods, transactions may be scarce and liquidity is poor. When there is a problem with market liquidity, the operation of the fund may lead to an increase in the cost of opening positions or difficulties in realizing them.

It can be seen that although the expected rate of return of private equity investment is relatively high, there are still many risks, which are reflected in market risks, policy risks, management risks and operational risks. According to the Measures for the Administration of Private Equity Funds, when signing a contract, private equity fund managers and investors should disclose the risks, inform the investors of the risks and confirm them in writing. At this point, everyone should have a good idea of whether private equity funds need to take risks.

What do you need to engage in private equity funds?

1, the name shall conform to the Regulations on the Administration of Name Registration, and the words investment fund are allowed to be used in the names of investment enterprises that have reached the scale.

2. The words "venture capital fund, venture capital fund, equity investment fund, investment fund" in the industry terminology can be used in the name.

3. The registered capital of the fund investment fund company is not less than 500 million yuan, all of which are contributed in cash. The paid-in capital at the time of establishment shall be no less than 654.38 billion yuan: the registered capital shall be fully paid in within five years as stipulated in the Articles of Association.

4, the investment of a single investor is not less than 6.5438+million yuan.

5. At least three senior managers have experience in the management and operation of equity investment funds or related business experience.

6. The business scope of fund enterprises is approved as investment, investment management and non-securities business consulting.

What are the dividend distribution methods of private equity funds and what are the conditions?

Dividend ways of private equity funds: one is split, and the other is dividend.

Private equity fund dividend conditions:

1. After selling profitable stocks, private equity funds gain income.

2, the fund's current year's income to make up for the previous year's losses, before the current year's income distribution.

3. After the distribution of fund income, the net value of each fund share cannot be lower than the face value.

4. If there is a net loss in the fund investment year, the fund income will not be distributed.

Are private equity funds risky?

First, the risk of opaque information. Because private equity funds do not have strict information disclosure requirements, information opacity is the biggest risk of private equity funds. Investment planning, fund allocation, project tracking management and all other processes involving investment operation management may have insufficient information disclosure.

Second, investors' ability to resist risks is low. The reason why many investors participate in private equity investment is that they value the high returns of private equity funds, but high returns also correspond to high risks. Many investors do not have the corresponding ability to resist risks, so investment should focus on the risks of such private equity funds.

Risks of private equity funds caused by third-party fund managers. Due to the lack of strict industry access standards, there are obvious differences in fund managers' management ability, industry status and market recognition. In the same market environment, some fund managers can bring benefits to investors with accurate investment, while some fund managers may cause losses to investors.

Fourth, higher moral hazard. Fund projects are generally established in the form of partnership. However, due to professional, geographical and time constraints, investors can not effectively supervise and manage the project, so moral hazard is also a private equity risk that investors often encounter.

Fifth, project financing lacks professionalism. Project financing generally requires high practical experience and professional ability, but some private fund managers or management teams are not competent enough to effectively monitor and manage project financing.

Sixth, illegally absorb the risk of public deposits. Some private equity funds will attract investors to participate in investment by deliberately exaggerating income and concealing projects, and these private placements are likely to illegally absorb public deposits.