FOF fund and LOF fund are both common fund types in the market, among which LOF fund refers to listed open-end fund; FOF fund refers to the fund in the fund. So what's the difference between FOF and LOF? Which is more risky? The following is analyzed by Bian Xiao for everyone:
The difference between FOF and lof is that they are both funds, and LOF fund is called listed open-end fund. Fof funds are called funds in funds, and there are the following differences between them:
1, fof is a kind of fund that invests in other investment funds. Do not directly invest in stocks or bonds, and the investment scope is limited to other funds; Lof funds, listed open-end funds, can invest in stocks and bonds.
2.fof investment funds, the fund itself has to charge fees and management fees. Therefore, it is inevitable that there is a double fee problem in investing in fof products, but there is no double fee problem in lof funds.
3.fof is actually a fund that helps investors buy a "basket of funds" at one time. Through the second screening of funds by experts, it effectively reduces the characteristics of non-systematic risks; Lof funds are relatively risky.
4. The investment threshold of 4.fof funds is generally higher than that of lof funds, and the operating rules are a bit complicated.
What's the difference between FOF and LOF?
1, the investment target is different.
FOF funds invest in other funds, which means that investors buying FOF funds is equivalent to buying multiple funds. FOF specializes in investing in funds and does not directly invest in stocks or bonds. LOF fund is a listed open-end fund, which can be used for investment funds, stocks and bonds.
2. Different trading places
FOF fund is an OTC fund, so it can only be purchased outside the exchange, such as securities companies, Alipay, banks and so on. LOF can be traded on both the on-site exchange and off-site exchange.
3. The handling fee is different
The FOF fund itself is a fund that will charge fees and management fees. In addition, investment is also a fund, which will charge a series of fees. Therefore, the FOF fund has the problem of double charges. However, LOF funds only charge one fund fee, and there is no problem of repeated charges.
4. The investment threshold is different.
The investment threshold of FOF fund will be higher than LOF fund.
5. Different investment risks.
FOF fund invests in a basket of funds, and through the second screening of funds by experts, the investment risk (non-systematic risk) is effectively reduced, with less risk and relatively stable income, which is more suitable for stable investors with low risk tolerance; LOF funds may be more risky.
Which is more risky, FOF or LOF?
LOF funds are more risky than FOF funds.
Because LOF funds can be directly invested in the stock market for trading, and the fluctuation of the stock market is generally large, the risk of LOF funds is relatively large; FOF fund is only used to invest in other funds and does not participate in stock trading, so the fund has little fluctuation and little risk. Moreover, FOF funds have professionals to screen funds, so the probability of high-quality funds is high and the probability of sudden risks is low.
Few people buy LOF funds for the following reasons:
1 and LOF funds have higher transaction risks.
Because LOF fund belongs to high-risk wealth management products, although the expected return is high, the wealth management products with high expected return are often risky, so if investors are stable investors with low risk tolerance, then they are not suitable for investing in LOF funds.
2. The number of funds is small and the selectivity is small.
LOF has fewer types of transactions and less funds. Although there will be more types of listed open-end funds than ordinary exchanges, they are still less than ordinary open-end funds. Perhaps these types can not meet the investment needs of investors at present, especially for those investors who like to invest in high-risk funds and low-risk funds at the same time, LOF funds can not meet their needs.
3. The transaction cost is high.
LOF funds have many transaction costs, including subscription fees, redemption fees, operating fees (management fees, custody fees, sales and service fees) and so on. The subscription fee is calculated according to the transaction amount, and the larger the transaction amount, the smaller the subscription fee; The redemption fee is calculated according to the holding time of the fund. The longer the fund is held, the lower the redemption fee, or even the redemption fee is zero. Operating expenses will not be charged to investors separately, but will be accrued in the daily fund assets and paid monthly.
4. It is impossible to make a fixed investment in the fund.
Fixed investment is a common investment method in the market, but LOF funds need investors to take the initiative in the transaction process, so it is not suitable for fixed investment. And the amount of a single transaction is limited, neither more nor less.
5. Decreased market share.
One of the reasons for LOF fund's low market share may be that its investment threshold is high, arbitrage operation is difficult, and it is difficult to obtain additional income, so most investors will choose ETF funds for trading.
6. The investment cost is high.
This is a good thing, because LOF fund trading is too fast and convenient. However, due to its frequent transactions, LOF fund transactions need to charge a certain fee, so long-term accumulation will increase investment costs.
What is LOF?
From the name point of view, the difference between FOF-LOF and ordinary FOF lies in the addition of a small suffix "LOF".
It seems that to understand the difference between the two, we must first understand what LOF is.
LOF fund, the full name of which is "ListedOpen-EndedFund", is "Listed Open-ended Fund" in Chinese.
Do you feel that you don't know anything by elegant names?
Don't worry, and listen to the light decomposition!
In most cases, we buy and sell funds on these platforms, such as fund companies, banks, Alipay and Tian Tian funds. These trading channels are collectively referred to as "OTC".
Since there is an "off-court", there is an "on-court".
"Site" refers to exchanges (including Shanghai Stock Exchange, Shenzhen Stock Exchange and North Exchange).
There is a very important point to be reminded here: under normal circumstances, there is no way for funds traded on and off the market to get through to each other.
For example, exchange-traded funds are mainly ETFs, and ETFs cannot be traded over the counter.
Let's take the fund company official website as an example. The introduction page of an ETF product is as follows.
Risk warning: the past performance of the fund does not represent the future performance, and the market is risky, so the investment needs to be cautious.
Have you noticed that the purchase and fixed investment keys in the lower right corner are gray and cannot be operated?
Similarly, funds that can be purchased in fund companies, banks and other channels cannot be bought or sold in exchanges.
Maybe some friends will ask: it sounds inconvenient ~ isn't there a fund that can be traded on and off the market?
The answer is: yes ~ that is LOF!
Therefore, the advantage of LOF fund lies in providing convenience for people and increasing trading channels.