What Are Open-End Funds?

Open-end Funds, also known as mutual funds, refer to the fact that when the fund promoter sets up the fund, the total size of the fund unit or shares is not fixed. Depending on the needs of investors, the fund units or shares can be sold to investors at any time It can also be used as a fund operation method to redeem fund units or shares issued outside at the request of investors. Investors can either buy funds through a fund sales agency to increase the fund assets and scale accordingly, or sell fund shares held to the fund and recover cash to reduce the fund assets and scale accordingly. ^[1]

Open-end fund

Open-end Funds, also known as mutual funds, refer to

From different perspectives, we can divide open-end funds into different categories.

According to whether they can be listed on the stock exchange, open-end funds can be divided into listed-trading open-end funds and contract-type open-end funds.

A listed open-end fund refers to a securities investment fund whose units are traded on a stock exchange. The parties to this type of fund are investors. For example, trading open-end index funds (

Open-end funds and

To invest in open-end funds, we must grasp three basic principles.

First, you must know what your investment goals are, how long the term is, and how much investment risk you can afford. Have a correct understanding and judgment of the investment styles, past business performance and rate levels of different fund management companies.

Second, for

(1) Whether the fund has maintained good performance in the past.
(2) Is the fund management company trustworthy? Whether the fund manager has sufficient professional knowledge and rich investment experience.
(3) Whether the investment objective of the fund is consistent with your own investment objective. For example: Everyone's investment goals have a lot to do with age, income, family status and other factors. (Generally speaking) it is suitable to choose a fund with high risk and high yield at a young age, and it is suitable to choose a lower risk and stable return when it is about to retire Of funds.
(4) Whether the investment period of the fund is consistent with your needs. Generally speaking, the longer the investment period, the less investors need to worry about short-term fluctuations in the price of the fund, so they can choose more active fund types. If investors have short investment horizons, they should try to consider some lower risk funds.
(5) The amount of risk that investors can bear. In general, the return potential of high-risk investments is also high. However, if investors are more sensitive to short-term market fluctuations, they should consider investing in funds with lower risks and relatively stable returns. If investors are more aggressive in their investment orientation, they do not mind the short-term market fluctuations and hope to earn more. High returns, then some higher-risk funds may be more in line with investor needs.
(6) 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, I believe that investors will definitely choose the fund that is most suitable for you from a large number of funds.

The net asset value of the fund is the net asset value of the unit, referred to as the net asset value (NAV), which is the net value of each fund unit, equal to the total assets of the fund minus the total liabilities divided by the total number of unit shares of the fund. Refers to the total amount of fund assets at a point in time.

Article 52 of the newly announced Securities Investment Fund Law stipulates: "The fund manager shall handle the purchase and redemption of fund shares every working day; if there are other provisions in the fund contract, such agreement shall prevail." Article 13 stipulates: "The fund manager shall pay the redemption money on time, except in the following circumstances: (1) the fund manager cannot pay the redemption money due to force majeure; (2) the securities trading venue decides to temporarily suspend the market, resulting in the fund The manager cannot calculate the net asset value of the fund on that day; (3) Other situations stipulated in the fund contract. "Therefore, in addition to the legal provisions, investors should also pay attention to the provisions in the fund contract.

In reality, the restrictions on redemption of open-end funds are mainly restrictions on large-scale redemptions. According to the Procedures for Piloting Open-ended Securities Investment Funds, during a single open day of an open-end fund, when the fund s net redemption application exceeds 10% of the fund s total shares, it will be considered a huge redemption. When a large-scale redemption application occurs, the fund manager may postpone the remaining redemption applications on the premise that the redemption ratio accepted on the day is not less than 10% of the total fund share. That is to say, the fund manager can grant redemption according to the situation, or refuse to redeem this part. The rejected redemption part can be postponed to the next open day and calculated based on the net asset value of the day on that open day. Redemption amount. Of course, when a large amount of redemption occurs and the payment is postponed, the fund manager should notify the fund investor by mail, fax, or other methods specified in the prospectus, within the time specified in the prospectus, and explain the relevant processing methods. Announcement on relevant media. The time for notification and announcement shall not exceed three securities trading days.