Because when the fund encounters a huge redemption, the fund manager is forced to sell assets such as stocks or bonds because the cash reserve is not enough to meet the huge redemption requirements. This behavior may lead to a sharp drop in the stock price and ultimately affect the net value of the fund.

However, funds with frequent huge redemptions are basically funds with high proportion of institutional investors and small fund scale, so as long as these two types of funds are avoided, such risks are basically avoided. Generally speaking, the net redemption application of open-end funds on a single open day exceeds 10% of the total fund share on the previous open day, and it is considered that a huge redemption has occurred.

Extended data:

Precautions:

Closed-end funds don't disclose information as frequently as open-end funds. They publish the unit net asset value once a week and the portfolio once a quarter.

Closed-end funds operate in a closed way, and fund sponsors limit the total amount of fund shares issued when setting up funds. Moreover, during the duration, the fund shares cannot be redeemed directly and can only be traded on the stock exchange.

Therefore, in addition to funds, closed-end funds will also have on-site transaction prices, which may be discounted or premium to the net asset value of the unit according to changes in market conditions.

People's Daily Online-The fund market suffered heavy losses in the opening year, and the net value of Public Offering of Fund dropped rapidly.

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