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Public Offering Fund Guide

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“The funds that people often refer to now generally refer to securities investment funds.”

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The so-called fund is a collection of funds with a certain amount set up for a specific purpose. According to different purposes and purposes, it can be divided into securities investment funds, equity investment funds and special types of funds. The difference between the former two is that securities investment funds trade listed varieties, while equity investment funds generally trade shares of unlisted enterprises. Now people often refer to securities investment funds (hereinafter collectively referred to as “funds”).

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According to the different ways of raising funds, funds can be divided into private funds and public funds.

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Private placement fund is an investment fund that raises funds privately (privately) and establishes and operates. There are two basic ways: contractual fund that signs an entrustment contract, and corporate fund that jointly invests to establish a joint-stock company. Public funds are publicly issued investment funds, which take the contractual organization form in China, and are subject to the supervision of the competent government departments. They are constrained by industry norms such as information disclosure and profit distribution.

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Differences between public funds and private funds:

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The objects of raising are different. The objects of raising public funds are the general public, that is, ordinary investors, while the objects of raising private funds are a few specific investors, including institutions and high net worth people.

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The amount raised is different. Generally, the initial subscription amount of public funds is only 1000 yuan, while the initial subscription threshold of private funds is

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It’s one million yuan.

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The requirements for information disclosure are different. Public funds have very strict requirements for information disclosure. Generally, quarterly reports, semi annual reports and annual reports should be issued, among which the details of the top 10 heavy positions and portfolio changes should be disclosed. However, private equity funds have low requirements for information disclosure and strong confidentiality.

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Investment restrictions are different. Public funds have strict restrictions on investment varieties, investment proportions and minimum positions, while the investment restrictions of private funds are completely agreed by the agreement signed by both parties.

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The investment period is different. Generally, the investment period of public funds is short, and the subscription and redemption are flexible. There is no fixed time. Private equity funds generally have a closed period, during which they cannot be subscribed and redeemed, and they cannot be redeemed until a specific opening date as agreed in the contract.

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Performance compensation is different. Public funds generally do not draw compensation according to the performance of management products, but only charge management fees drawn according to a certain proportion of the management scale. Private equity funds not only charge management fees, but also usually draw 20% of the performance as remuneration.

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According to the different investment objects, funds can be divided into stock funds, bond funds, currency funds and hybrid funds.

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Equity funds are funds that invest in the stock market. According to the classification standard of funds by the CSRC, more than 80% of fund assets should be invested in the stock market. Due to the high proportion of stocks invested, the volatility is generally high. The risk is the highest among all fund types. Investors need to have a strong risk tolerance, but the long-term return is also relatively highest.

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If the biggest risk is the stock fund, the smallest risk is undoubtedly the currency fund, which refers to the fund invested in the money market. Generally speaking, we call the financial market with an investment term of less than one year as the money market. The investment varieties mainly include short-term bank deposits, short-term bonds issued by the state and enterprises within one year, etc. Its main characteristics are “worry free principal, convenient demand, and regular income”. These investment varieties can better guarantee the security of the principal, but also determine that the risk and long-term return of monetary funds in various funds are the lowest, so they are also called “quasi savings products”. The return of monetary funds will be higher than that of bank current deposits in the same period, and the current annualized rate of return is generally between 2% and 3%. As the investment is in financial products within one year, the liquidity of monetary funds is very strong, and a large number of products support immediate redemption.

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Bond fund refers to the fund in which more than 80% of the funds are invested in bonds. The long-term return of such fund is smaller than that of stock fund, but higher than that of monetary fund. From the perspective of risk, the investment risk of bond funds is higher than that of monetary funds, but the volatility of bond funds is relatively stable when the stock market fluctuates violently.

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Hybrid funds refer to funds that can invest in stocks, bonds and money markets. There is no fixed limit on the proportion of hybrid funds investing in stocks and bonds, and the allocation is very flexible. The fund manager can adjust the corresponding investment strategy according to the changes in the market. When the stock market has opportunities, we can increase the strength of stock investment and reduce the proportion of bond investment to obtain greater returns; When the stock market weakens, it can be operated in the opposite direction to increase the investment proportion of bonds and avoid the downside risk of the stock market. Generally speaking, the risk of hybrid funds is lower than that of stock funds, and the long-term yield is higher than that of bond funds. It is more suitable for investors who have average risk tolerance but hope to gain from the rise of the stock market.

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According to the different management methods of fund managers, funds can be divided into active management funds and passive management funds.

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Passive managed funds generally refer to index funds. The so-called index is a reference index that can timely reflect the overall rise and fall of the stock market. For example, the CSI 300 Index is an index compiled by selecting 300 stocks from the Shanghai and Shenzhen Stock Exchanges. Among them, the stocks constituting the index are called index constituent stocks.

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From this derivation, index fund is like the shadow of the index. It aims at a specific index, builds a portfolio by purchasing the constituent stocks in the index, and strives to keep pace with the index by tracking the index.

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Compared with passive funds, actively managed funds are a type of funds that seek to achieve performance beyond the market. Fund managers conduct in-depth research on the securities market and actively select stocks and bonds to determine the investment portfolio.

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According to different investment styles, funds can be divided into value funds, growth funds and balanced funds.

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In short, those stocks with stable operating performance and undervalued prices are called value stocks, which are generally dominated by large blue chip stocks, such as some financial and public utility stocks. In that case, value funds focus on investment in value stocks. Those stocks with good development prospects and rapid profit growth are called growth stocks, such as those in technology and emerging industries. Then, for the purpose of capital appreciation, growth funds are mainly invested in good growth potential stocks. Balanced fund refers to a fund that invests in value stocks and growth stocks.

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Because the style of stock investment is different, the risks are also different. The value fund has the lowest risk, the balance fund has the middle risk, and the growth fund has the highest risk, but its long-term return is also the highest.

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Funds can be divided into over-the-counter funds and over-the-counter funds according to their different trading venues.

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The over-the-counter fund is the fund that needs to open a stock account and purchase at the stock exchange. The biggest difference between over-the-counter funds and over-the-counter funds is that they can be purchased without opening a stock account. For example, the funds that investors see in banks or third-party fund sales platforms belong to over-the-counter funds.

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Funds can be divided into open-end funds and closed-end funds according to whether their scale changes.

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A closed-end fund is a fund that specifies how many shares will be issued when it is issued, has a fixed duration, and has a fixed fund size during the period. Open ended funds have no fixed duration, and the scale can change at any time due to the subscription and redemption of investors. Closed end funds are listed and traded on the stock exchange, while open-ended funds are sold and redeemed on the business premises of sales institutions and are not listed and traded. The subscription and redemption prices of open-ended funds are calculated based on the daily published net asset value of the fund unit plus or minus a certain service charge, which can clearly reflect the investment value and is not affected by the market supply and demand. The trading price of closed-end funds is mainly affected by the supply and demand relationship between the secondary market and the specific fund unit. When the demand is strong, the trading price in the secondary market will exceed the net value of the fund unit and a premium will occur; On the contrary, when the demand is low, the transaction price will be lower than the net value of the fund shares, and there will be a discount transaction.

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Funds can be divided into A-share funds and QDII funds according to their different investment regions.

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Those investing in domestic securities markets are called A-share funds, while those investing in foreign securities markets are called QDII funds. QDII is the abbreviation for qualified domestic institutional investors. To put it simply, QDII Fund is a domestic financial investment institution approved by the CSRC, which invests the funds of domestic subscription funds in the overseas capital market. It is an investment choice for overseas asset allocation.

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Funds can be divided into general funds and graded funds according to whether they have leverage or not.

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Hierarchical funds generally divide the Master Fund into Class A priority funds and Class B inferior funds, of which Class B funds use the funds of Class A funds to expand leverage. If a loss occurs, the fund of Class B fund will be lost first. When the net value of Class B is lower than a certain agreed value (generally 0.25), in order to ensure the security of the principal of Class A and the realization of the agreed income, the net value of the Master Fund, Class A and Class B shares will be classified as 1, and the shares will change accordingly, which is called down folding. In the process of discount, there will be a huge deviation between the price and the net value, which will lead to the disappearance of the premium rate after translation, thus causing huge losses to investors.

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