Understand the difference between tiered funds and ordinary funds in one article!
Advantages of tiered funds compared with ordinary funds
1. The investment form of tiered funds has advantages. Investors can have either low-risk preferences or high-risk preferences. The ratio of shares a and b is adjusted according to the investor's own risk tolerance.
2. Investors can flexibly allocate assets according to their own investment characteristics and market trends.
3. Hierarchical funds provide convenient, fast and low-cost fund investment methods for various investors.
Disadvantages of hierarchical funds compared with ordinary funds
1. The leverage ratio is too large and the risk is amplified.
Some leverage can reach 2 times or even 5 times or more. The net value of the fund fluctuates greatly and the risk is high; however, the hierarchical market has no entry threshold and a large number of investors enter the market. Once the price suddenly drops, , some investors do not have high ability to deal with it.
2. Fund discounts may cause losses to investors
Although general fund discounts have no overall impact on investors’ net worth, value losses may also occur; In addition, if investors fail to respond in time when the fund discounts, there may be a risk of loss.
3. The tiered fund market system is not yet perfect
my country’s tiered funds are still in the development stage. In the investment market, imperfect systems and irregular markets will be used to price premiums and attract Investors took profits, causing some investors to suffer heavy losses.
That’s all the above about the differences between tiered funds and ordinary funds. I hope it will be helpful to everyone. Warm reminder, financial management is risky, so investment needs to be cautious.