Monetary FundIt is an open-end fund that is funded by the fund manager after the idle funds of the society are collected and the fund custodian keeps the funds. Monetary funds invest mainly in short-term monetary instruments with high safety factors and stable returns, such as treasury bonds, central bank bills, commercial paper, bank deposit certificates, and government short-term bonds.
Monetary funds are different from other types of open-end funds, with high security, high liquidity, stable profitability, and "quasi-savings". Monetary fund income will fluctuate due to fluctuations in the investment market. Under normal circumstances, incomes higher than bank deposit interest can be obtained, but the money fund does not guarantee the security of the principal.
1. Principal security: Most money market fund investment varieties determine that the risk is the lowest among all kinds of funds. Monetary fund contracts generally do not guarantee the security of the principal, but in fact the monetary fund is determined due to the nature of the fund. In reality, there is very little loss of the principal. In general, money funds are treated as cash equivalents.
2. Strong financial flows: liquidity can be comparable to demand deposits. The fund is easy to buy and sell, the funds are available for a short period of time, and the liquidity is very high. The general fund can redeem a day or two of funds to get the account. At present, the fund company has opened the instant redemption of the money fund, which can be received on the same day.
3. Higher yields: Most money market funds generally have a level of return on treasury investments. In addition to investing in investment instruments such as exchanges that can be invested by general institutions, money market funds can also enter the inter-bank bond and repo market and the central bank bill market for investment. The annual net rate of return can generally be saved in one year. Compared with the interest rate, the annual income is shown in the table below, which is higher than the income level of bank savings during the same period. Not only that, money market funds can also avoid hidden losses. When inflation occurs, the real interest rate may be low or even negative, and money market funds can grasp the interest rate changes and inflation trends in time to obtain stable higher returns.
4. Low investment cost: Buying and selling money market funds are generally free of handling fees. Subscription fees, subscription fees, and redemption fees are all zero. It is very convenient to enter and exit funds, which not only reduces investment costs, but also ensures liquidity. The first subscription/subscription is 1,000 yuan, and the purchase again is incremented by 100 yuan.
5. Dividend tax exemption: The face value of most money market funds will always be kept at 1 yuan. The income is calculated every day, and there is interest income every day. Investors enjoy compound interest, while bank deposits are only simple. Monthly dividends are transferred to fund shares, and dividends are exempt from income tax.
In addition, the general money market fund can also be converted with other open-end funds under the fund management company, which is efficient, flexible and low-cost. When the stock market is good, it can be converted into a stock fund. When the bond market is good, it can be converted into a bond fund. When the stock market and the bond market have no good opportunities, the money market fund is a safe haven for investors. Grasp the opportunities in the stock market, the bond market and the money market.
Monetary funds can be divided into Class A and Class B according to the size limit of participating funds. Class A is for small and medium investors, and Class B is for institutions and large investors. The minimum subscription limit for Class A money funds is generally 1,000, and Class B is 5 million. Their sales service rates are also different. For example, Haifutong Currency Class A annual sales service rate is 0.25%; Haifutong Currency Class B annual sales service rate is 0.01%.
Open-end funds include general open-end funds and special open-end funds. The special open-end fund is LOF, the full name of English is “Listed Open-Ended Fund” or “open-end funds”, and Chinese is called “listed open-end fund”. That is, after the issuance of the listed open-end fund, the investor can purchase and redeem the fund share at the designated outlet, and can also buy and sell the fund on the exchange.
Close-end funds refer to the fund's sponsors, when setting up the fund, the total amount of the fund's issuance is limited. After the total amount is raised and the necessary approval or filing is made, the fund is declared and closed. No new investment will be accepted for a certain period of time. The circulation of fund units is based on the method of listing on the stock exchange. Investors should buy and sell fund units in the future, and they must conduct bidding transactions in the secondary market through securities brokers.
The difference between the two
1. The variability of fund size is different. After the open-end fund is issued and opened, its fund units are redeemable, and investors can purchase fund units at any time, so the size of the fund is not fixed; the size of closed-end funds is fixed.
2. The trading prices of fund units are different. The trading price of the fund unit of the open-end fund is based on the net asset value of the fund unit, and there will be no discount or premium phenomenon. The price of closed-end fund units will be more affected by market supply and demand, and price fluctuations will be greater.
3. Fund units are bought and sold in different ways. Investors of open-end funds can purchase or redeem funds directly from fund management companies at any time, with lower commission fees. The trading of closed-end funds is similar to stock trading, which can be bought and sold on the stock market, and requires a handling fee and a securities transaction tax. In general, the cost is higher than open-end funds.
4. Different investment strategies. Open-end funds must retain a portion of the funds in order to meet investors' redemption at any time, and long-term investments are subject to certain restrictions. Closed-end funds are not redeemable, they do not need to withdraw reserves, they can make full use of funds, make long-term investments, and achieve long-term business performance.
5. The market conditions required are different. The flexibility of open-end funds is relatively large, and the scale of funds is relatively easy to expand. Therefore, it is suitable for financial markets with higher openness and larger scale. Closed-end funds are just the opposite. The financial system is not perfect and the degree of openness is low. Smaller financial markets.
★how to choose
Look at the scale
The advantages and disadvantages of funds of different scales are different. If the scale is small, in the environment of falling interest rates in the money market, the continuous entry of incremental funds will rapidly dilute the investment income of the money funds, and large-scale funds will not have such concerns. In an environment where interest rates in the money market are rising, smaller-scale funds are turning small and the fund yields will rise rapidly. In combination with various factors, investors should choose a monetary fund of moderate size and strong operational capability.
Second look old and new
The older and more affluent money market funds, the old funds generally operate more mature, have certain investment experience, and hold more varieties of high yields. It is a wise choice to choose a money fund that has been established for a long time and has relatively stable performance.
Third, look at A, B
Among the current 51 funds, 40 funds are A-level funds and 11 funds are B-level funds. The main difference between the two is the investment threshold. The general A-level fund has a starting amount of 1,000 yuan, and the B-level starting amount is More than one million yuan. From the perspective of income, the B-level income is higher than the A-level, but the threshold is too high, and ordinary investors are still suitable for selecting the A-level fund.
Fourth look at the product line
When the stock market is not good, investors can use the money fund to safely avoid investment risks. When the stock market investment opportunities come, they can use future fund conversion functions to improve investment returns. Therefore, it is recommended to select a fund company product with a complete product line.
Investors should try to choose a relatively large-scale, long-term performance of the money fund to invest, because the larger the larger the fund operation, the more favorable the investment operation, but also better control of liquidity risk. As of the end of the first quarter of this year, the 4th Jinniu Monetary Fund, the Harvest Fund, has a scale of more than 10 billion yuan, which is 5.7 times the average size of the money fund, accounting for 7.6% of the total size of the money fund, and is not easily affected by large-amount redemption. More suitable for the purchase of money funds.