Which is better, domestic fund or foreign fund?

Everyone knows a little about buying funds. There was a wave of buying funds before. Everyone bought the fund, and no one remembers when the time passed. I will help you popularize knowledge. Funds are divided into domestic funds and foreign funds. Let's start with domestic and foreign funds.

The difference between domestic funds and foreign funds

① The cost of public offering funds in China is high.

The total annual rate in Public Offering of Fund is about 1%~2%, while the average rate in Public Offering of Fund is below 1% (index funds are cheaper, about 0.05%~0.25%).

② Asset allocation is more flexible.

③ Public offering of funds abroad has a high probability of liquidation.

For example, if we look back at the past 15 years of the American fund market, we can find that nearly 50% of the funds have been liquidated or merged (that is, the surviving funds have a very strong survivor bias). In Public Offering of Fund, there are also cases of liquidation/closure, but the probability is much smaller.

④ Banks are the domestic and overseas sales channels of publicly raised funds.

One of the main disadvantages of buying Public Offering of Fund through the bank is that the subscription fee is too expensive. If you are abroad, you will generally be told that the maximum subscription fee is 5%, and you will be charged 2% (or 3%) if you get a discount. But even 2% is not a small expense. In China, if you buy through a bank, you have to pay a subscription fee. If you buy through the online shopping platform, you can save a lot of subscription fees.

⑤ The foreign ETF market is very mature.

At present, there are more than 6,000 ETFs in the world. Therefore, most (active) publicly issued funds can be replaced by ETFs (higher transparency, better performance and cheaper fees). In China, the number of ETFs is still limited, and it is impossible to replace Public Offering of Fund on a large scale (for example, there are few ETFs with fixed income, and investors can only rely on bond funds to invest in fixed income at present).

Generally speaking, if you want to invest in overseas markets, you'd better buy overseas funds directly (public offering/index/private placement, etc. ), and if you want to invest in the China market, you'd better buy domestic RMB funds directly.