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Monetary Fund

Edit: melt 360 finishing Source: Financial 360 Date: 2014-03-24

Summary:

The Monetary Fund is an open-ended fund that accumulates idle funds in the society and then runs the fund manager. The fund custodian keeps funds.
Monetary FundIt is a kind of open-ended fund that accumulates the idle funds of the society and then runs the fund manager and keeps custodian funds. Monetary funds mainly invest in short-term monetary instruments with high safety factors and stable returns, such as government bonds, central bank bills, commercial paper, bank certificates of deposit and government short-term bonds.
Unlike other types of open-end funds, Monetary funds are characterized by high security, high liquidity, steady profitability and "quasi-savings." Monetary Fund income fluctuates upward and downward depending on fluctuations in the investment market. Generally, it can earn more interest than interest on bank deposits. However, the Monetary Fund does not guarantee the security of principal.

★ product characteristics
 
1. Principal Security: Investment by most money market funds determines that the risk is the lowest among all types of funds. Monetary Fund contracts generally do not guarantee principal security, but in fact the nature of the fund determines the value of the Monetary Fund In the rare case of principal losses. Monetary funds are generally regarded as cash equivalents.
2. Strong liquidity: Liquidity is comparable to demand deposits. Fund trading is convenient, funds arrive time is short, high liquidity, the general fund redemption one or two days of funds can arrive. At present, fund companies have opened instant monetary fund redemption business, the day can be credited.
3. Higher yields: Most money market funds generally have the level of return on Treasury investment. In addition to investing in exchange-traded buy-backs and other investment vehicles that ordinary institutions can invest in, money market funds can also enter the inter-bank bond and repo markets and invest in the central bank bills market. Their annual net rate of return can generally be kept in one year Compared with the interest rate, the annual income is shown in the table below, which is higher than that of bank savings in the same period. Not only that, money market funds can also avoid hidden losses. When inflation occurs, the real interest rate may be very low or even negative. Money market funds can grasp the changes in interest rates and inflation trends in time to obtain stable and high returns.
4. Investment costs are low: the money market funds are generally exempt from handling fees, subscription fees, subscription fees, redemption fees are 0, access to capital is very convenient, both to reduce investment costs, but also ensure the liquidity. The first subscription / purchase 1,000 yuan, again to buy increments of 100 yuan.
5. Dividend tax exemption: The majority of money market funds face value of 1 yuan forever, earnings every day calculation, interest income every day, investors enjoy compound interest, and bank deposits are simple interest. Monthly dividends carried forward to fund shares, dividends exempt from income tax.
In addition, the general money market funds can also be converted with other open-end funds under the fund management company, with high efficiency, flexibility and low cost. When the stock market is good, it can be turned into a stock fund. When the bond market is good, it can be turned into a bond fund. When the stock market and the bond market are not very good, the money market fund is a good safe haven of funds. Investors can get in time Grasp the opportunities in the stock market, bond market and money market.

★ classification
 
Monetary funds can be divided into categories A and B according to the scale of the funds they participate in, category A for small and medium-sized investors and category B for institutional and large-value investors. The minimum purchase limit for Class A Monetary Fund is generally 1000 and Class B is 5 million. Their sales service rates are also different. For example, the annual sales and service charge rate of the Fortis A class currency is 0.25%, while that of the Fortis currency B grade is 0.01% per year.
 
Open-end funds
Open-end funds include general open-end funds and special open-end funds. A special open-ended fund is the LOF. The full name is "Listed Open-Ended Fund" or "open-end funds." Chinese is called a "listed open-end fund." That is, after the listing-type open-end fund issuance, investors can both purchase and redeem the fund shares at the designated outlets, and they can also buy and sell the fund at the exchange.
 
Closed-end funds
Close-end funds (close-end funds) refers to the fund's sponsor in the establishment of the fund, the fund unit of the total issuance of the total fund-raising and the necessary approval or filing, the fund is declared established and closed, in the No longer accept new investment in a certain period of time. The circulation of fund units adopts the method of listing on the stock exchange. Investors will have to deal in the secondary market through securities brokers in the future.
 
The difference between the two
1. The variability in the size of the fund is different. After the issuance and opening up of open-end funds, their units are redeemable, and investors can subscribe for units at any time, so the size of the fund is not fixed; the size of closed-end funds is fixed.
2. Units of the transaction price is different. The open-end fund's unit price is based on the net asset value of the unit is based on, there will be no discount premium phenomenon. The price of closed-end fund units will be more affected by the market supply and demand, the price volatility.
3. The unit of the sale of different ways. Investors in open-ended funds are free to buy or redeem funds directly from fund managers at low commissions. Closed-end fund trading similar to stock trading, trading in the securities market, the need to pay fees and securities trading tax. In general, costs are higher than open-end funds.
4. Different investment strategy. Open-end funds must retain a portion of the fund in order to meet the investors redemption at any time, long-term investment will be subject to certain restrictions. The closed-end fund can not be redeemed, no need to withdraw reserves, to make full use of funds, long-term investment, long-term operating performance.
5. The market conditions required are different. Open-end funds are more flexible and scalable financial resources easier, so apply to a higher degree of openness, large-scale financial markets; and closed-end funds on the contrary, apply to the financial system is not perfect, less open and Smaller financial markets.

how to choose
 
A look at the scale
The strengths and weaknesses of different sized funds are different. If the scale is relatively small, under the environment of declining interest rates in the money market, the continuous entry of incremental funds will rapidly dilute the investment returns of the IMF. However, such large-scale funds do not have such concerns. In the context of rising interest rates in the money market, the smaller funds are better off and the fund's rate of return will rise rapidly. Based on various factors, investors should choose moderate-sized and highly-functional monetary funds.
 
Second look old and new
The more sophisticated the money market funds are, the older ones generally operate more maturely, have some investment experience, and hold more high-yield varieties. Choosing a long established and relatively stable monetary fund is a wise choice.
 
Three to see A, B.
The current 51 funds, 40 funds for the A-class funds, 11 funds for the B-class funds, the main difference between the two is the investment threshold, the general A-class funds from the initial investment of 1,000 yuan, B-level from the amount of investment In more than one million yuan. From the proceeds point of view, B-class income is higher than some of the A-level, but the threshold is too high, the average investor is still suitable for the choice of A-class funds.
 
Fourth look product line
In the stock market is not good, investors can use the currency fund to safely avoid investment risks, stock market investment opportunities to come, you can use the future fund conversion capabilities to improve investment returns. Therefore, it is recommended to choose a perfect product line fund company products.
Investors should try to choose a relatively large-scale, long-term excellent monetary fund to invest, because the larger the larger the Fund managed to move more room for investment and more conducive to the operation, but also to better control liquidity risk. As of the end of the first quarter of this year, the fourth Taurus Monetary Fund - Harvest Monetary Fund surpassed 10 billion yuan in size, 5.7 times the average size of Monetary Fund and 7.6% of the total Monetary Fund. More suitable for the purchase of monetary funds.

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