The discount rate of closed-end funds is one of the important indicators to measure the market performance of closed-end funds. Closed-end fund is a fund product issued by fund companies, and investors can't purchase or redeem it at will. The discount rate of closed-end fund refers to the percentage difference between the unit net value of closed-end fund and its market price. When the discount rate of closed-end fund is positive, that is, when the market price of closed-end fund is lower than its unit net value, it is called discount; When the discount rate is negative, that is, the market price of closed-end fund is higher than its unit net value, it is called premium.
The discount rate of closed-end funds reflects the market's views on closed-end funds and is also an important reference for investors to measure the valuation level of closed-end funds. The change of discount rate is influenced by many factors, including market trading sentiment, fund asset allocation and fund manager's ability. Understanding the discount rate of closed-end funds is very important for investors to formulate reasonable investment strategies.
Law of discount rate of closed-end funds There are various laws of discount rate of closed-end funds. Here are some common laws:
1. The influence of market trading sentiment
The discount rate of closed-end funds is closely related to market trading sentiment. When investors are not optimistic about market expectations and their risk preference decreases, the discount rate of closed-end funds tends to rise, that is, closed-end funds are more likely to be discounted. On the contrary, when market sentiment improves and investor confidence increases, the discount rate of closed-end funds may decrease or even become a premium.
2. The impact of fund asset allocation
The discount rate of closed-end funds is also affected by the allocation of fund assets. When the assets included in the closed-end fund portfolio do not rise smoothly, or some assets face uncertain risks, investors' valuation of the fund may decline, leading to an increase in the discount rate. On the contrary, if the assets in the fund portfolio perform well, investors' valuation of the fund may rise and the discount rate may fall.
3. The influence of fund manager's ability
The discount rate of closed-end funds is also related to the ability of fund managers. When the fund manager's investment ability is recognized by the market and the fund performance is excellent, investors are more willing to buy the fund, which leads to the fund premium. On the contrary, if the fund manager's performance is poor, or the management of the fund company changes, investors' valuation of the fund may decline and the discount rate will increase.
How to use closed-end fund discount rate to understand the law of closed-end fund discount rate, investors can formulate reasonable investment strategies according to the following points:
Adjust investment strategy according to market trading sentiment. When the market sentiment is pessimistic, a more attractive valuation level can be obtained by paying due attention to closed-end funds with higher discount rate. When the market is optimistic, pay attention to closed-end funds with low premium rate or negative premium to avoid overestimating risks.
In-depth study of the fund's asset allocation and the ability of fund managers. By understanding the investment portfolio of closed-end funds, this paper analyzes the characteristics of risks and returns, and evaluates the investment ability and management ability of fund managers. Choose closed-end funds with reasonable fund asset allocation and strong fund managers to invest.
Pay attention to the historical discount rate trend and market valuation level of closed-end funds. By studying the historical data of closed-end fund discount rate, we can know its long-term average discount rate and fluctuation range, judge whether the current discount rate deviates from the normal level, and provide reference for investment decision.
The discount rate of closed-end funds is an important indicator for investors to understand the market performance and valuation level of closed-end funds. Understanding the laws of discount rate and making reasonable investment strategies according to these laws are helpful to improve investment efficiency and seize investment opportunities.