The differences between trusts and private equity are as follows:

1. First of all, the regulatory entities are different

Private equity funds are supervised by the China Securities Regulatory Commission, while trust plans Supervised by the China Banking Regulatory Commission. In other words, they have different backgrounds. Trust is a banker, while private equity fund is a securities dealer. Because the regulatory entities are different, the regulatory requirements will also be different, and the supervision of trusts is relatively strict.

2. The flow of funds is not necessarily the same

According to the contract, the private equity foundation stipulates that the money is used to buy stocks or equity and cannot change its use at will. Trust plans are different in that they are essentially trust-based financial management on behalf of others.

Trust funds can be used to invest in the stock market, invest in equity, or even directly lend money to others (private equity funds cannot lend directly). If the contract does not specify the whereabouts of the funds, the trust can change the purpose of the funds. In fact, private equity funds can also be regarded as a standardized trust (with agreed investment purposes). Private equity funds abroad are also trusts in a broad sense.

3. The segregation of assets is different

Private equity funds can be recovered by creditors and basically have no effect of asset segregation. Unless you are in a closed period, such as owing money, creditors can seize you. The realization of private equity products requires you to repay the debt. But after signing a trust, the right to use your wealth is no longer in your hands. If you designate the income to someone else, the right to income is not yours, so you can use a trust plan to achieve asset isolation.

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