First, let's look at their respective definitions. When the fund is issued, it is either a private equity fund called "initiating fund" or a Public Offering of Fund called "raised fund". Sponsored funds are usually initiated by some large investors, such as some large enterprises or institutional investors, while the raised funds are raised from the public and directly managed by fund companies. By definition, there are obvious differences between these two funds. Sponsored funds can complete capital accumulation, attract more investors to join, and then invest in various investment fields to obtain income, and strengthen communication and trust among investors; The raised funds have more public participation and are more transparent, convenient and flexible.
Secondly, there are great differences in the investment process between the two funds. Sponsored funds often need a certain industry background and in-depth investment experience, so we can see that these funds usually involve complex and high-risk asset categories, such as real estate, private equity, venture capital and so on. Therefore, they often need a long lock-up period, and redemption is difficult and risky. On the other hand, the raised funds usually adjust the investment portfolio according to market demand and invest flexibly according to market trends and liquidity. Fund companies will also regularly publish investment reports for investors' reference to guide investment decisions. Raising funds usually does not design high costs, but sometimes it may be because the scale of funds is not enough and the assets are too small.
Third, in terms of investor protection, raised funds are usually stricter than sponsored funds. Fund-raising funds often have to be investigated by a large number of regulatory agencies to understand the internal operation, and there are perfect legal exemption clauses to ensure that the interests of investors will not be infringed. However, investors need to be especially careful, because sponsored funds are not strictly regulated like raised funds. Sponsored funds may remain silent on some good opportunities or prefer relational capital, making their operation mode less transparent than raised funds. At the same time, they may have a high threshold and initial investment amount, which limits the choice of some investors.
In short, no matter what kind of fund, it has its own advantages and disadvantages. Choosing to invest in a certain fund type may need to be decided according to your risk preference, experience and investment objectives. For investors who are new to the fund, raised funds are relatively safe, while for investors with rich investment experience and strong risk tolerance, sponsored funds may be a better choice.