The popular explanation is to invest the assets of A share and B share as a whole, in which the holder of B share pays the agreed interest to the holder of A share every year, and the overall investment profit and loss after paying the interest is borne by B share ... Take a graded fund product X(X is called the parent fund) as an example, which is divided into A share (agreed income share) and B share (leveraged share). Share A agrees on a certain rate of return, and the remaining assets of fund X after deducting the principal and accrued income of share A are all classified as share B, and the losses are borne by the holders of share B within the limit of the net asset value of share B. When the overall net asset value of the parent fund falls, the net asset value of share B falls first; Accordingly, when the overall net value of the parent fund rises, the net value of the B share will appreciate faster after providing the A share income. Share B usually gains certain leverage by participating in the distribution of residual income or taking losses to a greater extent, which has a more complicated internal capital structure and its nonlinear income characteristics make it imply options.

According to the investment nature of graded parent funds, parent funds can be divided into graded stock funds (mostly graded index funds) and graded bond funds. Graded bond funds can be divided into pure bond grading funds, mixed bond grading funds and convertible bond grading funds. The difference is that pure bond funds can't invest in stocks, mixed bond funds can invest in stocks with no more than 20% assets, and convertible bond grading funds can invest in convertible bonds.

According to the nature of graded sub-funds, class A shares in sub-funds can be divided into class A agreed income share funds with a time limit and class A agreed income share funds with a perpetual period. Class B shares in sub-funds are also called leveraged funds.

Leveraged funds can be divided into stock-type B leveraged share funds (mostly leveraged index funds), bond-type B leveraged share funds (leveraged debt base) and reverse leveraged funds.