What are funds and what are their categories? How to invest in funds

Investment fund is a collection of many scattered investors' funds, entrusted to investment experts (such as fund managers), investment management experts according to its investment strategy, unified investment management, for the benefit of many investors an investment tool. Investment fund collection of public funds, *** with the sharing of investment profits, share the risk, is a benefit *** enjoy, risk *** share the collection of investment methods.

First of all, first of all, the fund mainly through the following two ways to profit:

1, the net value of growth: due to open-ended funds invested in the stock or bond appreciation or access to dividends, dividends, interest and so on, resulting in the growth of the net value of the fund unit. After the net value of the fund unit rose, investors sell the number of units of the fund when the net value of the difference, that is, the gross profit of the investment. And then deduct the gross profit to buy the fund when the subscription fee and redemption fee, is the real investment income.

2, dividend income: according to national laws and regulations and the provisions of the fund contract, the Foundation regular income distribution. The dividends received by investors are also part of the profit.

Second, then talk about the types of funds

First, if it is based on the different investment objects, securities investment funds can be divided into: equity funds, bond funds, money market funds, mixed funds, special funds, international funds and so on. Among them, special funds are oriented to special events, for example, specializing in chasing stocks of companies on the verge of bankruptcy, especially investments similar to the orphan's shareholding, with a view to resurrecting the stock as a result of joining catalysts, i.e., earning huge profits. As for international funds, they specialize in cross-border investment, placing their money in the stock markets of various countries and traveling internationally, which in fact constitutes part of international hot money. In terms of types, if more than 60% of the fund assets are invested in stocks, it is a stock fund; if more than 80% of the fund assets are invested in bonds, it is a bond fund; if it is invested only in money market instruments, it is a money market fund; and if it is invested in stocks, bonds and money market instruments, and the proportion of stock investment and bond investment does not comply with the regulations for bond and stock funds, it is a mixed fund.

Secondly, if we look at the investment risk perspective, several types of funds bring different risks to investors. Among them, stock funds have the highest risk, money market funds have the lowest risk, and bond funds have the middle risk. The same variety of investment funds will also have different risks due to different investment styles and strategies. For example, equity funds can be further categorized according to the degree of risk: balanced, stable, index, growth, growth and emerging growth funds. Growth funds are designed to pursue the growth of the fund's net asset value (NAV), i.e., investors who buy this fund are chasing the spread (Capiyal gain) rather than income distribution. Emerging growth funds, as the name suggests, invest the fund's money in emerging markets, chasing higher-risk profits. Of course, as with all risky investments, the higher the risk, the higher the return; the lower the risk, the lower the return.

Overview of the fund

Securities investment fund is to raise funds through the public offering of fund units to the society and use the funds for securities investment. The holders of the fund units enjoy the right of ownership of assets, the right to distribution of income, the right to dispose of the remaining property and other related rights, and bear the corresponding obligations to the fund.

Investment fund operation process:

1. Investors' funds are pooled into a fund;

2. The fund is entrusted to an investment expert - fund manager to invest and operate;

In which, (1) investors, fund manager and fund custodian set up a trust agreement by way of fund contract, which establishes that investors' contributions (and enjoyment of the rights to the assets) are to be invested in the fund; and (2) investors' funds are to be invested in the fund. Agreement to establish a fiduciary relationship between the investor's contribution (and enjoy the benefits and risks), the fund manager is entrusted with financial management, and the fund custodian is responsible for the safekeeping of the funds.

(2) The fund manager and the fund custodian (mainly banks) establish the responsibilities and rights of both parties through the custody agreement.

3. The fund manager distributes the investment income to investors after professional financial management.

In China, the fund custodian must be a qualified commercial bank and the fund manager must be a professional fund manager. Fund investors enjoy the returns of securities investment funds, but also bear the risk of loss.

Second, the fund knowledge

Fund contract

Simply put, the fund contract is a "entrusted financial agreement (contract)". Fund managers, custodians, investors for the establishment of investment funds and the written legal documents used to clarify the rights and obligations of the parties to the fund.

The fund contract regulates the status and responsibilities of the parties to the fund. The manager has the right to operate and manage the fund's property; the custodian has the right to keep the fund's property; and the investor enjoys the right to income from the fund's operation and bears the investment risk.

The fund deed also provides the basis for the formulation of other documents relating to the investment fund, including the prospectus, the fund offering program and the distribution plan. If these documents conflict with the fund deed, the fund deed must prevail. Therefore, the fund deed is the fundamental legal document for the normal operation of the investment fund.

The main contents of the fund deed include: the rights and obligations of the holders, managers and custodians of the investment fund; the issuance, purchase, redemption and transfer of the fund, etc.; the fund's investment objectives, scope, policies and restrictions; the valuation of the fund's assets; the disclosure of the fund's information; the fund's fees, distribution of proceeds and taxes; and the termination and liquidation of the fund.

With the general "entrusted financial management agreement" is different, the fund contract is not to investors and fund managers, fund custodians to sign, in the investor fully understands the content of the fund's contract on the basis of your subscription to the fund means that you acquiesced to the contract, and is willing to entrust the fund manager "to manage money on your behalf".

Custodianship agreement

Custodianship agreement is a fund company or fund manager and the fund custodian on the custody of the fund's assets to reach an agreement, the protocol from the legal determination of the commissioning party and the fiduciary party's responsibilities, rights and obligations of the two sides, and focuses on determining the custodian side.

The responsibilities and obligations of the custodian party are mainly:

1. responsible for the custody of the fund assets according to the instructions of the fund manager;

2. responsible for the delivery, clearing and transfer of the securities purchased and sold by the fund according to the fund manager's instructions, responsible for the distribution of the investment dividend proceeds to the investors of the fund;

3. responsible for the effective supervision of the custodian fund according to the fund deed. Effective supervision of the operation of the custodial fund in accordance with the fund deed, etc.

Third, the characteristics of securities investment funds

1. Securities investment funds are operated by experts, management and specialized in investing in the securities market fund. Fund assets are managed by specialized fund managers. Fund managers are equipped with a large number of investment experts, who not only possess extensive knowledge of investment analysis and portfolio theory, but also have accumulated considerable experience in the investment field.

2. Securities investment fund is an indirect way of securities investment.

Investors invest in the securities market indirectly by purchasing funds. Compared with the direct purchase of shares, the investor does not have any direct relationship with the listed company, does not participate in the company's decision-making and management, and only enjoys the right to distribute the company's profits.

3. Securities investment funds have the advantages of small investment and low cost.

In China, the face value of each fund unit is RMB 1 yuan. The minimum investment amount of securities investment fund is generally low, investors can according to their own financial strength, more or less buy fund units, thus solving the small and medium-sized investors "not much money, difficult to enter the market" problem. The fund's fees are usually low.

4. Securities investment funds have the benefits of portfolio investment and risk diversification.

Based on the experience of investment experts, to achieve a minimum of risk diversification in investment, usually to hold about 10 stocks. There is an adage in investment science that says, "Don't put your eggs in the same basket." However, small and medium-sized investors usually cannot afford to do so. If an investor invests all his money in the shares of a single company, he may lose everything if the company goes bankrupt. The securities investment fund through the collection of many small and medium-sized investors in small amounts of money, the formation of a strong financial strength, can be invested in a variety of stocks at the same time to diversify the investor's funds, so that the loss caused by the decline in the price of certain stocks can be used to make up for the profits of the other stock price increases, diversified investment risk.

5. Strong liquidity.

The buying and selling procedures of the fund are very simple. For closed-end funds, investors can directly cash in the secondary market, buying and selling procedures are similar to those of stocks; for open-end funds, investors can either subscribe to or redeem funds directly from the fund manager, or subscribe or redeem through securities companies and other sales agents, or entrust investment consultants to buy and sell on their behalf.

Four, fund Q&A

What is an income fund?

Their investment strategy is a unique value-based investment. The fund manager focuses on dividend income and invests mainly in stocks of utilities, financials, and natural resources companies with strong dividend yields. This type of fund should theoretically be more stable than the market as a whole and employs a lower-risk approach to equity investing. It also typically invests in bonds.

What is a balanced fund?

This type of fund is concerned with both capital appreciation and dividend income, and even considers future dividend growth, but is most concerned with the potential for capital appreciation. This type of fund invests in both growth stocks and income stocks with a good dividend payout record, with the goal of generating dividend income, moderate capital appreciation and capital preservation, so that investments are all subject to relatively low risk with the potential for high investment returns. The fluctuation of its net value is smoother, and the return obtained and the corresponding risk are both between growth funds and indexed investments. Balanced funds are therefore suitable for investors who want both higher dividend income and more stability than growth funds, such as insurance funds and pension funds, which are mainly looking for capital preservation, as well as individual investors who are relatively conservative.

Funds such as Shanghai's Fund Hanxing (500015) and Fund Jintai (500001) fall into this category.

What is an index fund?

Indexed investment is an investment in securities that attempts to replicate a security price index exactly or to construct a portfolio in accordance with the principle of compiling a security price index. Funds that invest in this way are called index funds, and their objective is to generate investment returns that are broadly equivalent to the market average.

Since the 1990s, most of the stock fund managers on Wall Street in the United States are lower than the performance of the market index in the same period, so that the index fund to replicate the market index trend as the core idea of the rapid development of the global growth and development of the traditional securities investment thinking to form a huge impact and challenge.

Theoretically, the index fund is simple and inexpensive to manage, as long as it chooses a market index and buys a corresponding proportion of securities according to the proportion of each security in the index, and holds them for a long period of time. However, the market index is based on a moment in time the price of securities for mathematical processing and get an abstract index, and index funds can not directly buy the index, but in the actual market conditions through the purchase of the corresponding securities to realize, due to the transaction costs and time differences and other factors, the performance of the index fund and its tracking of the index can not be the same as the index, there are bound to be some differences, therefore, index funds Therefore, index funds also require professional management by fund managers.

Funds such as Tianyuan (4698) and Pufeng (4693) listed on the Shenzhen Stock Exchange are index funds.

What is a thematic (specialized) fund?

It is a small or medium-sized fund that invests in specific types of stocks or securities. Thematic funds are established either because of fund size constraints or because the manager believes that a particular type of security has growth potential or special investment value. For example, the Technology Fund prefers to invest mainly in listed technology companies. SZSE-listed fund Puhua (4711) is a fund that invests in technology-led listed companies.

What is the relationship between a securities company and a fund manager?

Most of the sponsors of funds in China are securities companies, and to some extent, fund managers originate from securities companies. Fund managers are responsible for the investment operation of fund assets, the main responsibility is in accordance with the provisions of the fund contract, the development of fund assets investment strategy, organization of professionals, select specific investment objects, decide to invest in timing, price and quantity, the use of fund assets for securities investment. In addition, the fund manager shall, on its own or by commissioning other organizations, promote and sell the fund and be responsible for providing investors with information about the fund's operation (including calculating and announcing the net asset value of the fund, preparing the fund's financial report and being responsible for making timely announcements to the public, etc.). The manager of an open-ended fund shall also handle the subscription and redemption of the fund in a timely and accurate manner in accordance with the relevant state regulations and the provisions of the fund contract.

In addition, securities companies may act as underwriters and issue coordinators of securities investment funds. In China, the issuance of closed-end funds is generally carried out by securities companies as issue coordinators, which act as agents for the purchase and sale of funds, delivery and distribution of proceeds after the funds have been authorized to be listed and traded. In addition to the direct sales of open-end funds by fund managers, the sales of funds can also be completed by securities companies, commercial banks and other intermediaries, these independent sales organizations specialize in providing sales services for fund managers and receive a certain amount of sales commissions and service fees.

From this point of view, the securities company is responsible for fund issuance and trading institutions, while the fund manager is responsible for fund investment institutions, the relationship between the two is the intermediary and the operator of the relationship.

What is the difference between the online and offline offering process of a fund?

Internet issuance is generally used in the issuance of closed-end funds, investors subscribe to the fund program is mainly divided into two steps:

The first step, investors in the securities business department to open a stock account (or fund account) and fund account, which obtains a qualification that can be bought funds. On the day of the fund's release, the investor can subscribe to the fund by filling out a fund subscription form at the fund's sales outlet if the fund account opened at the business department has funds that can be used to subscribe to the fund.

The second step, investors in a few days after the subscription day, to the business department bulletin board to confirm their subscription fund allocation number, check the relevant newspapers and magazines announced the lottery number, to see whether they won the lottery. If you win, the corresponding fund units will be transferred to your account.

The offline offering method is generally used in open-end fund offerings. Investors first go to designated outlets (fund management company gold, distribution banks, etc.) to apply for an account card for the corresponding open-ended fund, and deposit (or transfer) subscription funds into the established sales outlets, where they can go through the subscription procedures and confirm the results within the specified time.

The choice of fund type, the owner does not have to consider the conversion with other funds, then the main should be from the earnings and the convenience of the transaction of two aspects to consider, the current market 2006 cumulative annualized returns in the performance of the benchmark of more than 1.8% of the currency funds (including short and medium-term debt varieties) are as follows:

01** 952001 Junta No. 1 33.9474 2.0651

02* 110007 Efangda Monthly Return A 32.0220 1.9480

03* 050006 Bosera Stable Value 32.0088 1.9472

04 040003 Hua'an Cash Fortune 31.9381 1.9429

05 360003 Everbright Paulson Currency 31.9126 1.9413

06 150005 Galaxy Yinfu 31.8176 1.9356

07 320002 Noonan Currency 31.5407 1.9187

08 162206 Xiangcai Huoyin Currency 31.4845 1.9153

09 090005 Dacheng Currency A 31.4845 1.9153

08 162206 Xiangcai Huoyin Currency 31.4845 1.9153

09 090005 Dacheng Currency A 31.2894 1.9034

10 020007 Guotai Currency 31.2562 1.9014

11 163802 Bank of China Currency 31.0748 1.8904

12 202301 Nanfang Cash Plus 30.6666 1.8656

13 519999 Changxin Interest Income 30.5944 1.8612

14 070008 Harvest Currency 30.5301 1.8572

15 160606 Penghua Currency 30.5277 1.8571

16 270004 Guangfa Currency 30.4584 1.8529

17 050003 Bosera Cash Income 30.3844 1.8484

18 240006 Huabao Cash Bao A 30.0905 1.8305

19 510005 Haifutong Currency 30.0830 1.8300

20 200003 Great Wall Currency 29.9161 1.8199

21 003003 Huaxia Cash Plus 29.8679 1.8170

Which with * is the short and medium-term bond fund or currency-based brokerage financial products. The owner can choose according to the bank where his funds are deposited.

Money funds (including short- and medium-term bond funds) are free of charge for subscription and redemption, and all other fees have been deducted from the daily published returns (or net value), with the convenience of similar demand savings.