Funds
Funds
Funds, which includes mutual funds and unit trusts, gather money from many investors to make investments.
The fund management companies will pool your money with other investors into stocks, bonds and similar assets. The fund manager chooses the investments and each investor owns a proportion of the total fund, according to how much money is put in.
The investors should always read the fund's offering document and product key facts statement before making a decision. This gives such details as the investment goal, strategy, risks, fees and procedures.
Common Types of Funds
|
High yield bond funds |
High yield bond funds generally seek to offer higher returns than other types of bond funds by investing primarily in high yield bonds or debt securities which are below investment grade (sometimes referred to as junk bonds), unrated debt securities, distressed and/or selective default debt securities. Issuers of these bonds and/or debt securities are generally subject to higher credit or default risk. It is also common for high yield bond funds to make regular distribution to investors and such distribution may be paid out of capital. |
|
Futures and |
A futures and options fund generally refers to a fund that seeks to achieve capital appreciation primarily through investment in futures contracts and options. There is a wide range of assets underlying futures contracts and options, including commodities (such as agricultural products and precious metals), currencies, interest rates and equity/other indices. To fulfil its investment objective, futures and options funds usually adopt the investment strategy of trend following and use systematic models to guide their investments under various market conditions and pre-set conditions. |
|
Islamic funds |
Islamic funds are funds which comply with the Islamic (Shariah) principles. |
|
Guaranteed funds |
A guaranteed fund is a type of collective investment scheme that guarantees to pay back a pre-determined percentage of the invested capital, subject to satisfaction of certain pre-determined conditions. |
|
Structured funds |
A structured fund is a collective investment scheme where the management company seeks to achieve its investment objectives primarily through investment in or use of financial derivative instruments (for example, swap, repo or access products). A structured fund is usually passively managed and some may offer payouts if the pre-determined conditions are met. |
|
Listed closed-end funds |
There are a number of funds listed on the Stock Exchange of Hong Kong ("SEHK"), including open-end funds such as Tracker Fund and closed-end funds. Unlike open-end funds which have no restriction on the number of units, closed-end funds have a fixed number of units. Listed closed-end funds generally do not continuously offer their units for subscription and their units are not redeemable. You can only buy or sell the fund units on the SEHK which provide you with an opportunity of intra-day trading of the fund just like trading of listed stocks. You need to pay a brokerage commission, transaction levy, trading fee, stamp duty and other charges similar to those paid for trading stocks. |
|
Commodities funds |
The Commodities funds will generally purchase either a basket of commodity futures or over-the-counter financial derivatives linked to the performance of the relevant index. However, depending on the specific structure, the funds may also invest in debt securities, stocks and other derivative instruments. |
|
Target date funds |
A target date fund is typically designed to be a long-term investment for individuals with a particular “target date” in mind, such as a retirement date. A target date fund generally holds a diversified portfolio of assets, including stocks, bonds, and cash and cash equivalents (such as money market instruments), which is rebalanced among asset classes over time. |
Reference Links