Analysis on the reasons of high returns of private equity funds

Many investors must have heard of the difference between private investment funds and securities funds, but there are also many novice investors who are undoubtedly curious. Which is more profitable, private investment fund or securities fund? In fact, compared with securities funds, private investment funds do have higher returns. For some investors, private investment funds are a better choice. So what is the reason?

1. There are fewer restrictions on private investment funds, and the project investment share of stocks is flexible: in the middle of 0- 100%, products that can be called "24 hours" can avoid systematic risks brought by market sales according to flexible shareholding choices. However, the securities fund has strict regulations on the proportion of project investment in stocks. For example, stock funds, about 80% of assets are invested in the stock market as much as possible. In the case of bad market trend, securities funds can not avoid financial risks at all.

2. It is also stipulated that the project investment ratio of equity funds in a single stock shall not exceed 10%, that is to say, equity funds with an enterprise scale of 10 billion dollars shall not buy a single stock with assets exceeding 10 billion dollars. When a stock goes up or down, the whole stock fund goes up 1%, which is far from enjoying the rising income of high-quality stocks with resources. At present, the scale of sunshine private equity investment fund enterprises is generally from one million to one hundred million. Compared with securities funds, the total amount is relatively small, and the operation process is more flexible. Moreover, if necessary, private equity investment funds can focus on one or two manufacturing industries and five or six stocks, with much fewer restrictions than securities funds.

3. Due to the diversity of private investment funds, the interests of the person in charge of private investment funds are consistent with those of investors. The fixed surcharge of private equity funds is too small, and it depends on the excess sales fee to make profits. In other words, only investors can earn money, and private investment fund companies and responsible persons can earn excess sales expenses. Therefore, the perfectionist of private investment funds is absolutely positive, which is very important for the rate of return and relatively harsh for the control of the downward pressure on the economy. Securities funds are originally profitable by surcharges. Because the sales of securities funds have nothing to do with the profits of stock fund managers, when the products rise to a certain level, stock fund managers may lack the driving force of higher returns from perfectionists.

Although the income of private equity funds is higher than that of securities funds, the threshold of private equity funds is high, generally around one million, with poor liquidity and too few announcements. According to the relevant provisions of the Interim Provisions on the Supervision of Private Investment Funds issued by China Securities Regulatory Commission, if necessary risk investigation, information data analysis and inspection are carried out, only major matters need to be released to investors.