Six Tips For Open-Ended Funds

Open-ended funds, also known as mutual funds abroad, together with closed-end funds, constitute the two ways of operating a fund. An open-ended fund is a form of fund operation in which the promoter of the fund establishes the fund with a variable total share size and can sell shares to investors at any time, depending on the demand of investors, and can redeem the shares issued out of the fund at the request of investors. Investors can either buy funds through fund sales agencies to increase the assets and size of the fund accordingly, or sell their fund shares to the fund and collect cash to reduce the assets and size of the fund accordingly.

Tip 1: Don't borrow money to invest: Try not to borrow money to invest in a long-term investment where there is inevitably a down market, so as not to be burdened by interest and short-term hedging.

Tip 2: Diversify: If you have enough money, consider diversifying into more than one fund, depending on the investment characteristics of the different funds. This way, if one fund temporarily underperforms, by diversifying, there is a chance that the poor performance will be offset by the excellent performance of another fund.

Tip 3: Be prepared for the long term: Most successful investors have a long-term investment plan. Investing for the long term allows time for capital to appreciate and for short-term volatility to be overcome. Generally speaking, the stock market is highly volatile in the short term, but if you invest long enough, you can avoid the risk of short-term fluctuations, and with the stock selection and operation of a professional fund manager, you will have a better chance of winning in the long run.

Tip 4: Do understand the characteristics of your chosen investment fund: Before making an investment decision, you need to understand your personal investment needs and investment objectives. When choosing a fund, you need to read the fund's prospectus, prospectus or public prospectus carefully so that you can truly and fully assess the expected annualized returns, risks and past performance of the fund and the fund management company, so that you do not choose a fund variety that is not suitable for you.

Tip 5: Review your needs and circumstances regularly: Although we should invest for the long term, we also need to update our investment decisions as we age, our financial situation or our investment goals change. Most successful investors aim for higher profits in the early stages of saving and investing, and gradually move to more solid investments over time.

Tip 6: Do not engage in over-frequent operations: Unlike investing in stocks and closed-end funds, which are short term in and out, open-ended funds are essentially a medium to long term investment vehicle. This is because the prices of stocks and closed-end funds are subject to market supply and demand, with high short-term volatility, whereas the trading price of open-ended funds depends directly on the net asset value and is largely unaffected by market speculation. Therefore, too short-term rush timing in and out or chasing the ups and downs is not only not easy to make money, but will increase fees and costs.