Discount is to redistribute the holding quantity according to the net value, but the net value has not changed, but the price is reset to the same number as the net value. So, it seems to be a loss.

Simply put, the parent fund is a mother with two sons, A and B. A likes fixed income and B likes venture capital. Mom usually invests a sum of money in A and B according to 1: 1 (some funds are different, depending on the contract). A lends money to B for stock trading, and A only charges fixed interest. B is equivalent to investing with twice as much leverage. Because B has leverage, while A has low income and long cycle, under the influence of the market. B's secondary market price will be higher than its own value (net fund value). When the net value of the parent fund exceeds 1, the leverage of B will become smaller and smaller. If the net value of the parent fund is less than 1, B's leverage will become larger and larger. The more you fall, the faster you fall.

In the extreme market, the decline of net value far exceeds the decline of selling price in the secondary market. Because B has leverage, and the market stipulates that everyone can only fall by 10% at most. Therefore, when the parent fund falls to a certain extent, in order to protect the interests of A who only gets fixed income, the funds are redistributed. Assuming that the net value of B is 0.2 (but the market selling price may be 0.4 yuan, which is the source of risk), then it must be changed to 1 and start over, so that the number of funds in B will be reduced accordingly, but the overall net value of B will remain unchanged. However, it should be noted that it is calculated according to the net value rather than the secondary market price.

Therefore, it will cause greater risks and losses to the holders of B shares in the secondary market.