How do investment funds choose private equity companies?
First, see if it is legal and formal.
Ability alone is not enough. Remember the "background" of private equity funds. The background here is to be alert to whether it is legal to abide by this private placement regulation and illegally raise funds in the name of private placement. To check the background of private equity companies, of course, you should go to an authoritative place to check. As long as there is a record, mid-term men can find it. If you can't find it halfway, you need to ask questions about the fund you want to buy.
Second, look at historical performance.
Performance is not an absolute factor to evaluate the quality of a private equity institution, but it is also one of the important indicators. Because the main goal of buying a fund is to make money. However, the performance of the fund is also very concerned. The longer the better. It is best to compare the performance of 5 years with that of 10. Because, only after two market transformations can we better see the profitability of the fund. If you catch up with the bull market and get high returns, you still can't see clearly in the atmosphere. After many times of bull-bear alternation, the fund can still maintain a good income level, which shows to some extent that it has the corresponding ability in profit and risk control.
Third, look at the risk control retreat.
Although the income in the investment process is important, the risk control should not be underestimated. I believe that most investors do not want their fund income to fall sharply. Each private equity institution has its own risk control group, which will display its own risk control system. However, the specific working method is unknown. Therefore, when choosing a private placement institution, investors must focus on observing whether the long-term performance of the institution is stable, whether the intensity and frequency of withdrawal are too frequent, and what is the proportion of shares invested in private placement products. The withdrawal of private equity institutions is also an important indicator to measure risk control. The maximum exit means the worst possible situation after the project investment, and exit is closely related to the risk of investment. The champion who was prosperous the year before may face the fate of liquidation the next year, so investors should look at the maximum withdrawal rate when buying private equity. The greater the retreat, the greater the danger; The smaller the retreat, the smaller the danger.