After the closed-end fund expires, there are three ways to deal with it:
One is liquidation, that is, deducting a certain fee from the net value of the fund and returning it to investors;
The second is to turn into an open-end fund, which is what we often call "closed to open";
The third is to extend the maturity period, which is rarely used.
Extended data:
Dividend method
Different from open-end funds, the share of closed-end funds is unchanged, and dividends can only be paid in cash, not in the form of dividend reinvestment. For closed-end funds with long-term discount trading, dividends can play a role in enhancing the investment value of funds.
We use N0 to represent the unit net value of closed-end funds before dividends, and D0 to represent the dividend amount of unit shares, assuming that the normal discount rate of closed-end funds is p.
Compared with non-dividend, dividend increases the unit fund share value by P×D0, and fund dividend increases the investment value of closed-end funds, which is positively related to the discount rate and dividend amount.
In fact, because the dividends of closed-end funds enhance the investment value, closed-end funds are favored by funds before a large proportion of dividends, and the discount rate will be greatly reduced.
However, in practice, investors should pay attention to whether the discount reduction degree of closed-end funds overdraws the dividend promotion degree in advance.
discount rate
The connotation of discount rate refers to the loss of unit market price relative to the net value of fund shares. Therefore, the discount rate of closed-end funds is defined as follows:
The discount rate of closed-end funds refers to the ratio of the difference between the net fund share value and the unit market price of closed-end funds and the net fund share value.
The discount rate of closed-end funds will affect the investment value of closed-end funds. In addition to investment objectives and management level, the discount rate of closed-end funds is an important factor in evaluating closed-end funds.
For investors, the high discount rate of closed-end funds has certain investment opportunities. Because closed-end funds should be paid or liquidated according to their net value after the operation expires, the higher the discount rate of closed-end funds, the greater the potential investment value.
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