Business Introduction
Overview
In the securities market, publicly offered funds and private funds are the two primary investment instruments widely used by investors.
Publicly offered funds are issued by fund management companies and are open to the public for subscription and redemption. These funds have relatively low investment thresholds, and investors can purchase them through securities exchanges or fund distributors. Publicly offered funds are managed by professional fund management teams, allowing investors to indirectly invest in equities, bonds, and other assets by purchasing fund units, thereby achieving asset diversification and professional management. In contrast, private funds are issued to specific investors, feature higher investment thresholds, and involve relatively more complex subscription processes. Private funds operate with greater flexibility, typically employing a broader range of investment strategies and market approaches, making them suitable for institutional investors or high-net-worth individuals.
Investors participate in fund investing for a variety of reasons. First, fund investing can help investors diversify risk. By allocating capital across different asset classes and industries, investors can reduce the risk associated with any single investment and achieve a more resilient portfolio. Second, funds are managed by professional fund management teams that allocate assets and execute trades based on market conditions and the fund’s investment objectives, seeking to obtain optimal returns for investors. Such professional management can reduce investors’ administrative burden and improve investment efficiency and returns. In addition, purchasing funds is relatively simple and convenient; investors do not need to purchase or manage stocks or bonds directly, as the fund company manages these on their behalf, providing convenience and flexibility.
In summary, fund investing provides investors with diversified and professional investment options, enabling them to participate in the market easily and obtain corresponding investment returns. Whether public or private funds, investors can select suitable products according to their needs and risk preferences, and participate in the market through simple purchase and redemption processes to pursue long-term wealth growth.
Fund Management Procedures
In fund operations, brokerage firms primarily execute the following key steps:
- Accept investors' subscription and redemption instructions: Clients submit subscription and redemption requests for funds via a terminal; the broker must receive the client's instructions and simultaneously freeze the funds, aggregate clients' subscription and redemption orders according to business rules, and generate fund documentation.
- Submit fund documentation to the upstream party and await confirmation from the fund company: Operations personnel verify the generated fund orders in the fund management backend, transmit the subscription and redemption information to the upstream party, and wait for the fund company to return information on units and amounts.
- Populate order data: Upon receiving the fund company's files, populate information such as fund net asset value, subscription units, and redemption amounts, and verify and confirm these details.
- Subscription and redemption settlement: Subscriptions and redemptions are settled manually or automatically, including the delivery of purchased units and the disbursement of redemption proceeds. The system debits client funds for subscription orders and increases the client's fund unit holdings; for redemption orders, it deducts the client's fund units and returns funds to the client.
- Complete settlement and notify clients: Back-office personnel settle funds with the fund custodian through the bank, generate the fund transaction statement, and send it to the client.