What is the difference between fund priority and inferior level?
1. From the production point of view,
The priority will remain relatively certain and the expected rate of return with an upper limit; However, there is no clear rate of return target for the inferior level. In the simplest structure of priority and inferior level, after paying the priority income, all the residual income generated by product investment belongs to inferior level.
2. From the perspective of risk
When the investment loses money, it will be absorbed by the next level first. If the next level loses money completely, it will lose its priority. Therefore, from the perspective of risk, the secondary level represents the level with the highest risk, while the priority level is the level with relatively low risk.
What is fund priority?
The priority of the fund means that the priority partner can get the income distribution first according to the partnership agreement, while the inferior partner of the fund means that the inferior partner can get the residual income or bear the loss after the product takes precedence over the priority partner.
In order to meet the different needs of investors, investors with fixed income and low risk tolerance often have an agreed rate of return; Secondary investors are those who expect to increase investment capital through financing, and then obtain excess returns, and have a higher risk-return preference.
The above is the difference between priority and inferiority of funds. Simply put, the priority of the fund is low risk and low return, and the disadvantage is relatively high risk and high return.