1. Different positions of investors. Bondholders are the creditors of bond issuers, so bondholders have the right to recover principals and interests when it is due. Stockholders, as the shareholders of the company, have the right to express their own views on important decision the company has made, which indicates a property ownership between investors and the company. Holders of fund are the beneficiaries of the fund, which reflects a trust relationship.
2. Different levels of risk. Generally speaking, the principal of bond is guaranteed and the return is stable with risk smaller than trust funds. Stocks have higher risk than funds, because small and medium investors can only directly invest in several stocks with limited amount of disposable assets, and that leads increases the risk. The basic investment principle of trust funds is portfolio investment and dispersed risks. Capital invested in different proportions in securities with different redemption periods and types help reduce risk to a minimum.
3. Certainty of return. The return of trust fund and stock is uncertain, while that of a bond is certain. In general, trust fund has a higher return than that of a bond.
4. Different investment methods. Investments in stocks and bonds are direct, while investments in trust fund is indirect with experts determining the investment direction and selecting investment objects.
5. Different price-determining factors. Under the same external environment, the price of trust fund is mainly determined by the value of net asset. As for bonds, interest rate is the main price-determining factor. For stocks, the price is largely influenced by supply and demand.
6. Different ways of return on investment. There is a maturity period to bonds investment. Once it is due, the principal can be recovered. There is no time limit for stocks investment, unless the company goes under and enters the winding up phase. Investors could not recover their investment directly from the company but to sell the stocks for cash in the securities market at market price. Open-end funds generally have no time limit, so investors can redeem their units from the manager whenever they want.