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Definition of Public Offering Fund
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Public offering fund is an investment tool that gathers the funds of many investors, is entrusted by the fund custodian, managed and used by the fund manager, and earns returns for investors by investing in stocks, bonds and other assets. It is subject to the strict supervision and management of national regulatory agencies.
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Fund Custodian: Commercial Bank
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Fund Manager: Fund Management Company
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Regulatory authority: China Securities Regulatory Commission
Classification of public funds
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According to different investment objects, funds can be divided into the following categories:
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Funds that usually invest more than 80% of their stock assets.
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Funds that usually invest more than 80% of their bond assets.
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Funds that invest in stocks, bonds and money market instruments, and do not meet the classification criteria for equity funds and bond funds.
Money Market Fund
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A fund that invests in short-term investment instruments with low risk and high liquidity, such as bank fixed deposits, commercial promissory notes and acceptance bills.
Advantages of public funds
Advantage 1: rich variety and flexible configuration
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The types of funds cover almost all kinds of high, medium and low risk types, which can satisfy investors with different risk appetite and different risk tolerance.
Advantage 2: portfolio investment and risk diversification
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An investor buying a fund is equivalent to buying a basket of stocks or bonds with very little money, and the losses of some targets can be made up by the profits of other targets.
Advantage 3: flexible term and cash at any time
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The Fund is open for subscription or redemption every day, and investors can buy or redeem at any time.
Advantage 4: low threshold and low cost
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Usually only 1000 yuan or 100 yuan or even 1 yuan can be invested in the fund, and the charges are low. The subscription fee is usually discounted during the activity.
Advantage 5: strict supervision and transparent information
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The China Securities Regulatory Commission strictly supervises the fund industry, severely attacks acts detrimental to the interests of investors, and compels the fund to fully disclose information.
Advantage 6: Independent trusteeship and security
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The fund manager is responsible for the investment operation of the fund, and the fund assets are usually kept by the bank, which restricts and supervises each other.
Risks of public funds
Unknown price risk of subscription and redemption
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When investors subscribe and redeem fund units, they refer to the data of the last fund opening day. Investors cannot predict the changes in the net value of the fund from the last trading day to the current day, so investors cannot determine the transaction price.
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Fund investment risk refers to the stock investment risk and bond investment risk, the stock investment risk consisting of listed company operation risk and securities market risk, and the bond investment risk caused by interest rate change.
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Policy risk refers to the risk caused by market price fluctuation due to changes in national macro policies (such as monetary policy, fiscal policy, industrial policy, regional development policy, etc.).
Operating risks of listed companies
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If the listed company invested by the fund is poorly operated, its stock price may fall, or the profit used for distribution may decrease, which will reduce the investment income of the fund. Although investment diversification can be decentralized, it cannot completely avoid this non systematic risk.
Interest rate risk
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The fluctuation of market interest rate will lead to the change of the price and yield of the securities market, and also directly affect the price and yield of national debt. When the fund invests in national debt and stocks, its yield level will be affected by the change of interest rate.
How to select public funds?
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Before purchasing public funds, you should see clearly the following aspects:
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Whether the Fund has been able to maintain good performance in the past.
Quality of fund management companies and fund managers
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Whether the fund management company to which the fund belongs is trustworthy, and whether the fund manager who manages the fund has sufficient professional knowledge and rich investment experience.
Investment objectives of the Fund
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Everyone’s investment goal has a lot to do with age, income, family status and other factors. For example, when young, it is appropriate to choose a fund with high risk and high return, while when retiring, it is appropriate to choose a fund with low risk and stable return.
Investment risk of the Fund
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Generally speaking, the return potential of high-risk investment is also high. If investors are more sensitive to the short-term fluctuations of the market, funds with lower risk and stable returns are more suitable. If investors are more aggressive, do not mind the short-term fluctuations of the market, and hope to earn higher returns, then funds with higher risk are more suitable for investors.
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Whether the cost level of the fund is appropriate. If investors can use the above evaluation points to carefully compare the funds in the market and select the fund that is most suitable for them.