1. Is the premium rate just right or negative?
Generally speaking, if investors want to participate in the premium arbitrage of graded funds, they can choose graded funds with higher premium rate; If you are optimistic about the future trend of Grade B, in order to avoid the suppression of arbitrage, you can choose products with lower premium rate. When investors participate in premium arbitrage, they should try to avoid those varieties with small scale, high premium and obvious capital speculation for premium arbitrage, and choose funds with good liquidity, large scale and above average premium for arbitrage. Because in the case of the influx of arbitrage funds of the same scale, the impact of large-scale graded funds is much smaller than that of small-scale funds with poor liquidity, so the probability of success is relatively high. Excessive premium varieties often attract huge amounts of funds to participate in arbitrage in the short term, and the final result is that funds are sold centrally and it is difficult to sell and realize.
Second, how to use the premium rate to make a profit?
1. It is bought, divided and sold at a premium. When there is an overall premium, investors buy the parent fund and sell two types of shares after splitting. However, in practice, investors observe premium and arbitrage, but the arbitrage process takes four working days. When investors need to sell their sub-shares to realize the expected annualized expected return, the premium rate may have disappeared, that is, the selling price may be lower than the buying price, resulting in losses.
2. Discount purchase, merger and redemption. When there is an overall discount, you need to buy a steady and enterprising share in proportion first, and then redeem it after the merger to get the parent fund share. Since the whole process takes four working days, during which investors are equivalent to holding the parent fund, the decline in net value will devour the expected annualized expected return of arbitrage. In this regard, we can use stock index futures or short selling ETF to hedge the risk of net value fluctuation of the parent fund. This operation can realize risk-free arbitrage without considering the transaction cost.