When investing in stocks, people often refer to fund certificates. So what is a fund certificate? Are fund certificates a stock or not? Today, Real Estate Management will help you answer these questions.
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Table of contents
1. What is a fund certificate? How to distinguish fund certificates from stocks 2. How to invest, buy fund certificates effectively for stock investors
1. What is a fund certificate? How to distinguish fund certificates from stocks?
1.1. What is a fund certificate
?Fund certificate is also a type of security, its purpose is to determine the ownership of capital in a public fund by investors. This public fund is formed from the capital contributions of investors to make profits from the stock market.
When an investor wants to contribute a part of capital to this public fund, he/she is required to buy fund certificates to confirm that he/she has contributed capital to that public fund.
Fund certificates are a type of security
1.2. Are fund certificates and stocks the same
? Surely by now you also understand part of what a fund certificate is, right? However, fund certificates are similar to stocks and are two confusing concepts, so let’s find out the details of these two right here.
The essence of fund and stock certificates is the proof of ownership, rights and responsibilities of investors with their capital contribution. But to distinguish between fund certificates and stocks, you need to distinguish the following 3 characteristics:
Stocks are like a company’s means of raising capital for business purposes. And fund certificates are the means to establish an investment fund’s fund on the stock market. Stock owners have the right to give opinions in the business activities in which they contribute shares; Fund certificate holders do not have that right, all decisions are made by fund managers. If you want to invest in stocks or bonds individually, investors decide to invest based on personal decisions. For owners of fund certificates, the fund management company must act on behalf of investors.
Are fund certificates the same as stocks?
2. How to invest and buy fund certificates effectively for stock investors
Fund certificates are like a commodity that can be bought and sold on the market, because according to the evaluation of investors with many years of experience. Fund certificates are less risky and more liquid than stocks.
Why fund certificates are chosen by many investors, because they are managed by a team of experts, so they are reliable and safe. The profit that can be received is higher according to the perception of each person.
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But investing in fund certificates is not without shortcomings. The disadvantage for investors here is that they do not have the right to decide how much capital they may want to own in the fund, which makes investors passive. Therefore, here are a few ways that investors need to know when buying fund certificates:
2.1. Choose for yourself a reputable fund management company, many investors choose
Each type of fund certificate will have different good and bad sides depending on the policy of each business.
Investors need to learn more about that company by reading and studying information documents about fund certificates such as: objectives, rules, fund management capabilities and custodian bank of that company.
It is necessary to pay attention to the cost and income/expense ratio of that fund to decide the most effective investment in fund certificates.
When investing in fund certificates, you should choose a reputable fund management company
2.2. Need to know the net asset value of the investment fund
Net asset value per unit of fund certificate is a very important parameter. It evaluates the performance of an investment fund, and is also a condition for deciding whether the investment in buying and selling fund certificates is effective.
2.3. Investors need to defy risks when buying fund certificates
When investing in any field, it is difficult to avoid unexpected risks. Fund certificates are less risky, but investors still have to be wary of market fluctuations.
A thorough understanding of the stock market as well as fund certificates will help investors make accurate investment decisions and avoid risks.
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Fund certificates are assessed as low risk
Above is information about fund certificates, how to invest in fund certificates effectively. Hope you will make the right investment decisions in 2020.
