LOF funds refer to open-end funds issued and listed for trading through the Shenzhen Stock Exchange trading system.

The biggest difference between LOF funds and other funds is that investors can choose to subscribe and redeem at banks and other agency agencies based on the net value of fund shares at the end of the day, or they can choose to buy and sell at the matching transaction price at each member securities business department of the Shenzhen Stock Exchange. Simply

Say, it is a cross-market fund.

Investors can take advantage of this feature to conduct cross-market arbitrage.

For example, when the stock market plummets, because the selling orders of LOF funds on the exchange market are greater than the buying orders, the price of LOF funds falls sharply, and the magnitude of the decline will be far greater than the decline of its net value.

Therefore, investors can buy LOF funds with high discount rates on the exchange market on T day, and then go to the securities company to go through the custody transfer procedures (the transfer custody fee is about 30 yuan/transaction). On T+1 day, investors can

LOF funds can be redeemed at securities companies at the net fund value.

As long as the net value of the LOF fund on day T+1, after deducting handling fees, is higher than the buying price on the exchange market on day T, investors can realize arbitrage. The greater the price difference, the greater the profit.

Similarly, when there is a premium in the LOF fund, investors can also buy the LOF fund at the net value from a securities company, transfer it to custody, and sell the LOF fund on the exchange market on T+1 to complete arbitrage.