Trust Fund is a popular investment tool, and is usually created through accumulating capital of the investors. The capital is under the custody of the trustees and managed and operated by specialized trust fund management companies. Trust Fund is Through direct investment in stocks and bonds, and the earnings from investment will be distributed to their investors according to investment proportion. Individuals can invest in trust funds by sending their funds to investment experts for management. This makes it possible for the investors to easily get a foot into the global financial market and select the portfolio with optimal risk-reward ratio according to their investment objectives and orientation.
Trust funds, according to the matching principle of high yields with high risk, and low yields with low risk, can be divided into stock-based trust fund, asset allocation fund, trust bond, and monetary fund.
Structure of funds: investors, trustee, fund manager, deed of trust/articles of association, broker
Security of the Trust Funds Investment：
1. Security of Assets
Trust funds originated from Europe and America and a perfect system of laws, regulations, accounting, and trust administration has already been developed. The operation of funds is subject to full supervision of the relevant authorities. For example, the bankruptcy of Baring Bank had no adverse influence on the assets managed by Baring Asset Management Holding Limited. Till now, Baring Funds is still operating properly.
Moreover, take Hong Kong as an example, those funds which are examined and approved can be sold and promoted in public in Hong Kong. Trust fund companies, with highly transparent operation, have stringent procedures on internal duty reporting and an immaculate set of regulatory laws, and funds management and investment are running in different departments independently. As one could see, in the developed regions, trust funds are a mature and stable investment tool for asset management. Nowadays, the retirement schemes of most countries operate in form of trust funds.
2. Security of Investment
The investment objective and scope of trust funds differ from each other. The fund managers use quantitative analysis and risk-averse strategy to improve the stability and security of assets.
1) Global Equities: Global force, Global value...
2) Regional Fund: Greater China, Asia Pacific, Europe and America, Eastern Europe, Latin America, Middle East ...
3) Single Country Fund: China, Hong Kong, Vietnam, India, Korea, America, Russia...
4) Sector Fund: mining industry, real estate, agriculture products, health care...
5) Trust bond: government bond, corporate bond, high-yield bond, emerging market bond...
6) Monetary Fund: HKD, GBP, EUR, AUD, JPY, USD...
7) Alternative Fund: Guaranteed benefit, Risk-averse...
Severn Major Advantages of Trust Fund Investment：
1. Promising Growth Potential - professional fund managers will be at your service by keeping their eyes on the market, offering you the best investment opportunities in the global market, and help you diversify your investment to improve the potential of appreciation.
2. Diversified Asset Distribution - different assets have dissimilar trends. For example, when the stock market is heading south, high-quality bonds may have good prospects. From 2000 to 2002, most of the investment markets (including that in China) underwent downturn due to the bubble burst of the dot.com stocks, while some of the outstanding funds including Eastern Europe fund, bonds, hedge funds, energy, and precious metals experienced single- or double-digit growth. Funds offer you a chance to distribute your funds to various assets, which will make your portfolio be more steady and safe.
3. Easy Access to Investment - what you need to do is to decide which market you intend to invest. Then the rest of the investment decisions can be handed down to the professional fund managers. You will be relieved from taking hold of the trends of the financial market.
4. Minimizing the Risks – a trust fund usually has investment in 30 to 100 different stocks covering different markets simultaneously. The extent in pluralism of assets distribution is far better than that of investment of ordinary investors. "Don't put all your eggs in one basket." This is to emphasize the distribution of risks.
5. Flexibility and Convenience - most of the daily transaction of trust funds offer convenience to the investors to purchase or redeem the units on every working day. You can adjust your portfolio and transfer your funds at any time according to the market situation and your own judgment.
6. Transparency of Information - you can learn the targeted market situation in real time through public channels, which will help you know the earnings of your investment.
7. Free and Easy - trust funds makes investment easy. Then you can focus on your own business and enjoy family life and have leisure time to do something you really enjoy.