What is a Fund?

Simply put, a fund is a collective investment scheme that pools the money of many people and invests it in stocks, bonds, currencies, commodities or other securities to pursue a specific financial objective. Professional money managers select the particular securities that they believe will help the fund achieve the shareholders' "mutual" goal.

In Hong Kong, the most common types of funds are open-ended mutual funds and unit trusts. Both are essentially the same from an investment point of view. Legally, a mutual fund is set up as an investment company and investors are shareholders who own the shares. Assets are kept by the custodian. A unit trust is set up as a trust with a trust deed, the investors are unitholders (beneficiaries) who own the units. The trustee safekeeps the assets. The independent trustee or custodian must be a financially sound financial institution of good credit standing, and is appointed to hold the Fund's assets in trust. While these assets will be registered in the name of the trustee or custodian, they do not form part of those trustee or custodian's own assets. The trustee or custodian has a legal duty to ensure that the Fund operates in a manner as declared in its constitutive documents.

There are currently more than 2,300 funds authorized by Hong Kong SFC. Funds can be broadly categorized in the following groups: money market funds; bond funds; balanced funds (which own both stocks and bonds), stock funds and derivative funds. Within these broad categories, there are specific types of funds. Stock funds, for example, range from the more conservative "growth and income" funds to the more aggressive small company and single country funds.

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There are two types of fund investments, Direct Fund Investments and Lumpsum Investment Plans provided by insurance companies. They suit different investors according to their preferences.

Direct Fund Investments

Investors subscribe the funds at fund houses via Noble Apex. It is the most direct method of fund subscription. The investor is the holder of the fund units.

Our Direct Fund Investment Partners

Lumpsum Investment Plans

Lumpsum Investment Plans can be divided to fixed-fund-choice plans and unlimited-fund-choice plans.

As implied by the name, fixed-fund-choice plans include a list of funds in which the clients can invest. The number of the selected funds ranges from dozens to several hundreds. On the other hand, the clients of unlimited-fund-choice funds will not be provided with the fund list. But they can choose whatever they like in the fund market. Therefore, the investable funds can be up to few thousands.

In a long run, investors of Lumpsum Investments Plans can save lots of fund subscription fees because the fees are usually waived by investment plan providers. Investors can also tailor-make themselves an investment portfolio under the plans. Our investment consultants are surely willing to help in the portfolio management!

Our Lumpsum Investment Plan Partners

For more information about Mutual Funds & Unit Trusts, please contact us.