I. Income of the Fund
Fund income refers to the part of fund assets that exceeds their own value in the process of operation. Specifically, the income of the fund includes dividends, bonuses, bond interest, price difference between buying and selling securities, deposit interest and other income.
(1) bonus. The Fund enjoys the income from the distribution of the company's net profit by purchasing the company's shares. Generally speaking, there are two forms of dividend distribution for company shareholders: cash dividend and stock dividend. As a long-term investor, the main goal of the fund is to obtain long-term stable returns for investors, and dividends are an important part of the fund's income. The dividend of the invested stock is an important criterion for the fund manager to choose the portfolio.
(2) Dividends. The Fund enjoys the income from the distribution of the company's net profit due to the purchase of the company's preferred shares. Dividends are usually agreed in advance according to a certain proportion, which is the main difference between dividends and bonuses. Like dividends, dividends also constitute an important part of investors' income, and the level of dividends is also an important criterion for fund managers to choose investment portfolios.
(3) Bond interest. Bond interest is the interest that the fund obtains regularly because it invests in different kinds of bonds (government bonds, local government bonds, corporate bonds, financial bonds, etc.). China's "Interim Measures for the Management of Securities Investment Funds" stipulates that the proportion of funds investing in government bonds shall not be less than 20% of the fund's net asset value. Therefore, bond interest is also an indispensable part of investment return.
(4) the difference between buying and selling securities. The spread income obtained by fund investment in securities is usually also called capital gain.
(5) deposit interest. Payment of interest refers to the interest income from bank deposits of fund assets. This part of the income only accounts for a small part of the fund's income. Because open-end funds must be ready to pay the redemption application of fund holders at any time, they must keep some cash in the bank, which will earn interest on deposits.
(6) Other income. Other income refers to the savings of costs or expenses brought by operating the fund assets, such as miscellaneous income such as trading commission concessions obtained by the fund from securities companies due to block transactions. This part of the income is usually very small.
Second, the risk of the fund.
Fund risk can be divided into systematic risk and unsystematic risk.
1. Systemic risk
Systematic risk refers to the risk that the securities market invested by the fund is affected by the same-sex factors in the market. For funds, systemic risk is external and cannot be dispersed in the portfolio. Economic, political and social changes are the root causes of systemic risks, and their influence makes all funds move together in the same way. For example, if the economy enters a recession, the company's profits will decline, and the fund's income may generally decline.
Systematic risks mainly include the following risks:
(1) Political risk. A stable social and political environment is the basic guarantee for normal economic development. If a country's political situation changes greatly, such as the change of government, the health problem of the head of state, domestic turmoil and the crisis of foreign political relations, it will have repercussions in the securities market. In addition, political and social scandals such as politicians' participation in securities speculation and insider trading of securities practitioners will also pose a great threat to the stability of the securities market.
(2) Policy risks. Policy risk refers to the risk brought by market price fluctuation due to changes in national macro policies (such as monetary policy, fiscal policy, industrial policy, regional development policy, etc.). ).
(3) Interest rate risk. Interest rate risk refers to the risk that the fluctuation of market interest rate leads to the change of stock market price and yield. Interest rate directly affects the price and yield of national debt, and affects the financing cost and profit of enterprises. When the fund invests in treasury bonds and stocks, the income level will be affected by changes in interest rates.
(4) Business cycle risk. Business cycle risk means that with the cyclical changes of economic operation, the profitability of various industries and listed companies also changes periodically, thus affecting the trend of the secondary market of individual stocks and even the whole industry sector.
(5) Purchasing power risk. Purchasing power risk is also called inflation risk. The profit of the fund is mainly distributed in the form of cash, which may lead to a decline in purchasing power due to the influence of inflation, thus reducing the actual income of the fund.
(6) Market defect risk. Market defect risk refers to the market development and the imperfection of various financial laws and regulations, which affect the healthy development of the securities market.
2. Non-systematic risk
Unsystematic risk refers to the risk that affects an industry or individual securities. It is usually caused by some special factors, and has no systematic and comprehensive connection with the price of the whole securities market, only affecting the income of individual or a few securities. Theoretically, this kind of risk can be solved by diversifying investment. Nonsystematic risks mainly include the following contents:
(1) Risks of listed companies. The operating conditions of listed companies are influenced by many factors, such as management ability, industry competition, market prospect, technology update, financial situation, new product research and development, etc. All these will lead to changes in the company's profits. If the listed company invested by the fund is not well managed, its share price may fall, or the profit available for distribution may decrease, thus reducing the investment income of the fund. Other unpredictable changes may occur in listed companies.
(2) Liquidity risk. Liquidity risk refers to the difficulty for financial asset holders to sell assets at current prices. For fund investors, investment funds may have liquidity risk that it is difficult to "realize" funds. Fund managers often face two major liquidity risks: first, the assets they hold may suffer losses due to price uncertainty in the process of realizing; Second, there is not enough cash to meet the redemption requirements of investors. Therefore, once the fund shrinks sharply or investors focus on redeeming their investments, the liquid assets held by the fund can't make ends meet, and the fund will face serious liquidity risks.
(3) Discount risk. Discount risk refers to the risk that the market price of closed-end funds is lower than the unit net asset value after listing and trading. This often happens in China.
(4) Managing risks. Management risk refers to the risk caused by subjective reasons in the fund operation of fund managers, which will affect their judgment on economic trends, stock market price trends and various related information, thus affecting the income level of fund investment. Including: fund manager's system risk, fund manager's investment strategy risk, fund manager's management level risk and so on.
(5) Moral hazard. Fund is essentially a combination of contracts, and most investors entrust fund managers to manage and operate fund assets in the form of collective capital contribution. After investors choose a good fund manager, they can only observe other variables, which are determined by the fund manager's actions and other exogenous random factors, but only incomplete information of the fund manager. Therefore, fund managers may have the problem of "moral hazard" at any time, that is, fund managers make behaviors that are not conducive to fund investors when maximizing their own utility.