What Are Quant Funds?

The biggest difference between Funds of Funds (FOF) and open-ended funds is that the funds in the fund use the fund as the investment target, while the open-ended fund uses stocks, bonds and other securities as the investment target. It screens funds through professional institutions to help investors optimize fund investment results.

Funds in funds

FoF (Fund of Funds) is a specialized investment in other

Advantage

1. Lower operating costs

2. low risk

Disadvantage

1. Not easy to operate

2. Low yield

Relatively low risk

Investment risk is the issue that every investor cares about most. For Xinjimin, in the face of hundreds of different funds in the market, the difficulty and risk of individual selection are not small, and in order to avoid risks, what do you always want? All types of funds buy a little. A senior financial planner said: FoF is actually a fund that helps investors buy "a basket of funds" at one time, and through the expert's secondary selection of funds, it effectively reduces the characteristics of non-systematic risks.

The risk of selecting a single fund is high and difficult, and FoF has significantly reduced the risk of investment funds through its portfolio investment in the fund. FoF has locked its investors in the ranks of those with lower risk appetite, which also shows its stability relative to funds.

Slightly lower yield

Although the brokers that launch FoF claim that their products have the characteristics of "saving costs and high returns", since FoF cannot invest in stock funds in investment funds, it needs to allocate a certain currency or bond fund, and there must be no stocks in the returns. Funds have high returns, especially in bull markets. Professionals believe that if you have a professional vision, or if you have reliable investment experts to guide you, you don't need to be too cautious when the market continues to be optimistic. The fund is a long-term investment product. Although the return rate this year cannot be compared with last year, the profit probability of investing in stock funds will theoretically be higher than the relatively conservative FoF.

Currently in China, FOF is a wealth management product for banks and securities firms. As of August 2008, domestic securities firms have issued a total of 5 FOF products. Except for China Merchants Securities Fund Bao's performance in the first half of this year, which is lower than the average return of open-end funds, the remaining 4 All are higher than the average return of open-end funds. Of which, Huatai

From the name of FOF itself, we can see that FOF (Fund of Fund) has three major advantages.

First: Experts will help us choose a good fund. In fact, between funds and stocks, everyone is still more willing to believe in funds. But in the end which fund is good and which fund is not good, this is also quite particular about, the level of ordinary investors is relatively limited.

Second: the experts help us carry out the fund asset portfolio. Even if I choose one or two good funds, I can't invest all my assets in it. The investment should be diversified and the risk should be diversified. So another inherent benefit of FOF is that the experts come forward to help us with the allocation of fund assets. How much should we invest?

See if there is a compensation

Among the FOF products currently on the market, the managers of some products participate with a certain amount of their own funds, and promised that when the principal of the entrusted investor suffers a loss or does not reach the guaranteed income, the manager will compensate with its own share of assets or income . With the same level of operation, the more the managers have their own funds, the more secure the investor's funds are.

See how to compensate

For FOF products with income compensation measures, the compensation methods are not the same. Some promise to compensate by their own share assets, such as China Merchants Fund, and some promise to compensate by their own share income, such as Everbright Sunshine number. Others promise to compensate with management fees. For example, GF Enhanced Fund No. 4 is preferred. Generally speaking, the securities company bears the greatest responsibility for compensation with its own share of assets.

FOF

Therefore, investment is also more secure and more resilient, but at the same time, risks and returns coexist, and the investment returns of this type of product are not as good as other products.

In terms of investment style, products that promise to protect income are relatively aggressive. Generally speaking, the actual rate of return of such products is relatively high, such as Huatai Zijin No. 1 and Guoxin Financial. The product investment style that only promises capital preservation is relatively conservative, because as long as the investment principal is not lost, the brokerage company can take management fees.

Look at rates and commissions

Similar to funds, FOF products require certain participation fees, withdrawal fees,

FOF products have their own unique advantages, so they will definitely be recognized by more and more people in the future, but like funds, more and more people s approval means that their value starts to distort and starts to produce bubbles. There will be a day when the bubble will burst, just like stocks before 530 and current funds, investors will have a return to rational process. But like the current fund, everyone will be more rational after adjustment, so in the long run, the development of FOF products is still very promising.

Here I want to mention the recent adjustments. It should be said that just as the 530 adjustment gave the fund an excellent opportunity for development, the large adjustment of the fund can also be said to give the FOF products an excellent opportunity.

FOF products must be the general trend of future development. Of course, it cannot replace funds, just as funds cannot replace individual investors to directly speculate in stocks, but FOF products will definitely become one of the indispensable products in our financial market in the future. Investors invest in FOF products, but of course they cannot invest all their assets, and they must have a reasonable investment ratio. We know that the United States, which has the most developed capital market, basically uses half of household assets to invest in funds, but China and the United States have different national conditions. For example, Americans have basically no deposits, but most of us in China are bank deposits. Therefore, the small assistant here still recommends that investors reasonably configure FOF products according to the actual situation of their families.

Different ways to buy and redeem

The difference between FoF and funds, the financial planner pointed out: In addition to the high threshold for the purchase amount, FoF also has a disadvantage that the opening period is not every day, but according to different brokers, some are open for one quarter a week, and some are open for one week a day It cannot be bought or sold at other times. Funds are different, as long as they are not new funds in a closed period, they can generally be traded every day.

Difference in fees

Compared with the fund, the difference in the handling fee of FoF is that because the investment product of FoF is a fund, it cannot be avoided as long as it has the handling fee of the fund, so the fee rate just mentioned is actually based on the fund's handling fee. The secondary charge, simply put, means that investing in FOF will pay double fees.

Although FoF does not have much advantages compared with funds, FoF is the preferred financial product for novice investors and investors who have no time to manage their portfolios. The biggest difference between FoF and open-ended funds is that the funds in the fund use the fund as the investment target, and the fund uses stocks, bonds and other securities as the investment target. It screens funds through professional institutions to help investors optimize fund investment results.