Introduction to Investment Varieties–Fund&Turst



For investors with a complete zero foundation, it is very suitable to start with funds.

A fund is a fund-raising product released by a fund company. Users can purchase this product and hand over the money to the fund manager to invest in one or more assets. In other words, buying a fund establishes a trust relationship.

The product brochure of the fund will introduce the assets and risks of investment in detail. The risk can be high or low, depending on what kind of assets are invested, such as currency funds, which are very low risk, and bond funds, it depends on the investment What bonds and stock funds are generally medium to high risk.

Therefore, when buying a fund, you must carefully read the contract and the contract, and you must truly understand the risks and gameplay of the assets the fund will invest in. For example, if you want to buy a stock fund, then you still need to know what a stock is and how it works.

Fund managers are usually professionals with rich investment experience. They help you manage money and charge a certain management fee. A fund with good returns will attract more investors. The larger the fund, the higher the management fee rate. In some cases, the fees charged will also increase. On the contrary, if the fund’s income is not good, no one will invest, and the management fee will not get much. Therefore, the income of the fund manager is linked to the performance of the fund, so there is no need to worry about their random investment. .




Trust refers to the settlor who hands over a piece of property to the trustee and designates a beneficiary. The trustee performs investment management in accordance with the contract constraints and delivers the proceeds to the beneficiary. Contractual constraints include the way of investment, the timing of benefit delivery (one-time, periodic), specific conditions that beneficiaries need to meet, etc.

A typical example of a trust is that a local rich father is worried that his children will spend money indiscriminately, so he does not want to hand over the money directly to his children. Instead, he entrusts a trust company to invest, and the investment income goes to his children.

So trusts and foundations are somewhat similar, but there are some differences:

The fund is entrusted by A to invest in B, and the proceeds belong to A, which is a simple relationship between the two. A trust is a three-person relationship in which A entrusts B to invest, and the proceeds belong to C.
The capital threshold of a trust is generally much higher. If it is a trust that raises funds from the public, the number of investors it accepts is generally smaller than that of a fund.
The risk of trusts is lower than that of most funds. In early China, trusts even had the unspoken rule of “rigid redemption, zero risk”. Even now, the risk is still very low.
Trusts have a wider range of investment options than funds. Because the fund needs to update its net value frequently, it cannot invest in products that cannot track real-time value, but trusts are not subject to this constraint, so trusts can invest in industries, real estate, etc.
The contractual constraints of trusts can be very flexible, and even trusts entrusted by private tyrants can be customized, such as requiring that children receive trust income only after they get married and have children.
Trust liquidity is not as good as that of funds. Off-site funds can be purchased and redeemed, while on-site funds can be traded directly. As for trust products, usually they cannot be redeemed before they expire. Although they can be transferred according to law, it is still troublesome.

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