[ZT] calculate the cost before investing in open-ended Funds

The full holding costs of open fund operations consist of two parts: "shareholder fee" and "annual operation fee ". "Shareholder fee" is a non-Net fund fee, including subscription fee, subscription fee, redemption fee, bonus re-investment fee, and non-transaction transfer fee. "Annual operation fee" is the Fund's net worth fee, which can be divided into management fee, operation fee, and fund operation fee. These fees are often deducted when the fund company announces the net fund value.

 

The author believes that before making money, investment costs must be calculated. Here, I will focus on the "shareholder fees" that are closely related to investors ".

Subscription fee:

The purchase is called subscription during the issuance period of the open-end fund. China's new funds currently have a nominal value of RMB 1.

Subscription fee = subscription amount × subscription rate

Subscription share = (subscription amount-subscription fee)/Fund Unit nominal value

For example, an investor wants to subscribe to an open-ended fund of RMB 10 thousand. The open-end fund has a denomination of 1.00 yuan and a subscription rate of 1%. The investor can subscribe to 9900 shares of the Fund.

Subscription fee:

After opening the open-end fund's closed period, you can buy it as a subscription.

Purchase fee = purchase amount × purchase rate

Purchase share = (purchase amount-purchase fee)/t-day net worth of a fund

For example, if an investor has 10 thousand yuan to purchase an open-end fund, assuming that the purchase rate is 1.5%, and the net worth of a fund on t day is 1.50 yuan, the investor must pay 0.15 thousand yuan for the purchase, and the number of fund shares it has subscribed to is 6567.

Investors often determine whether to purchase or redeem the Fund today based on the fund Net Value published by the fund company. In fact, the purchase and redemption of open-end funds are based on the net value calculated after the stock market closes on the purchase or redemption day, that is to say, it is bought at an unknown price. Investors can only estimate the net value of the fund based on the stock market on the date of purchase or redemption. We name this unknown price as the net asset of the T-day fund.

Redemption fee:

Redemption amount = redemption share × T net worth of a fund

Redemption fee = redemption Amount X redemption Rate

Amount the fund company pays to investors = redemption amount-redemption fee

For example, if an investor wants to redeem 10 thousand funds, assuming that the redemption rate is 0.5%, and the net worth of each fund is 1.50 yuan, the investor's redemption amount is 15 thousand yuan, the redemption fee is 75 Yuan, and the actual amount obtained is 14.925 thousand yuan.

To encourage investors to hold funds for a long time, some fund companies have introduced frontend and backend charges. Front-end charging refers to the commission charged when investors subscribe or subscribe. The back-end charge refers to the payment of the purchase commission at the time of redemption. To encourage investors to hold their shares for a long time, this rate is generally reduced in 5 to 6 years by reducing the rate each year until it is completely exempted. If you choose the backend billing method, you can reduce the cost in the long term. It is worth mentioning that, if the Fund holds a fund with a 50 Index for only two years, the Fund's redemption fee will be reduced to 0.

Discount price:

Currently, open-ended funds are distributed through various channels, including managed banks, distribution banks, securities companies, and direct selling centers of fund companies. Investors can carefully compare the Fund subscription fees and transaction convenience of different distribution channels. Generally, the primary Underwriting bank of a fund will offer a discount of 0.5 million yuan or more for investors, and the direct selling center and securities companies will also offer a certain degree of discount. However, from the perspective of transaction convenience, most banks are currently the most convenient, and most banks, including Bank of Communications, have activated fund phone entrusted transactions. You only need to go through the relevant procedures at the bank counter, and then you can make various transactions and queries by phone.

The rising consumption price index cannot be ignored.

There are still some costs without clear price tags. Here, I must let investors understand and calculate them. From the fund income table published by the China Bank, we can see that the income of bond funds is significantly lower than that of stock funds launched in the same period. Taking Huaxia fund as an example, investors can see that the net worth of a fixed Bond Fund is 1.041 yuan (net worth in March 10), while the net worth of an aggressive Huaxia Growth Fund is 1.152 yuan (net worth in March 10 ). It can be seen that in the future, Capital Preservation and profit will have to be paid for capital preservation. The cost is that the income may be much lower than the death income of stock funds. This year, the National People's Congress has discussed setting the annual growth rate of the national consumer price index to around 3%. To put it simply, if investors want to invest in Capital Preservation Funds or bond funds, they will add about 3% additional purchase and Redemption fees on the basis of 1.5%. In this calculation, the income of the above-mentioned fund by the end of this year is: investment income-inflation rate-purchase, redemption fee ≥ 4.5%, in order to achieve a true sense of capital preservation investment. For equity funds, the fundamentals of the securities market are good, and their earnings naturally grow. The author makes statistics on 17 equity funds traded at China Bank, with an average return rate of about 15%. Relatively speaking, the rate of return is much higher.