Generally speaking, on-site funds are prone to premium under the following circumstances:
At the same time, LOF funds traded off-site and on-site, whose subscription is restricted or suspended off-site, are crowded into the market to buy, such as the recent oil fund.
The average daily trading volume of on-site funds is too small, for example, only a few hundred thousand. If you buy in large quantities, the price will increase, resulting in a premium.
Fund premium means that when the fund is issued, the demand is greater than the supply, and the issue price of the fund is greater than the value of the fund itself.
The transaction price of the secondary market trading fund is not equal to the net value of the fund. When the transaction price is higher than the net value of the fund, it is a premium transaction. On the contrary, it is a discount transaction.
Funds have broad and narrow definitions. Fund in a broad sense is the general name of institutional investors, including trust and investment funds, unit trust funds, provident funds, insurance funds, retirement funds and funds of various foundations. Funds in the existing securities market, including closed-end funds and open-end funds, have the characteristics of income function and value-added potential.
From the accounting point of view, capital is a narrow concept, which refers to funds with specific purposes and uses. Because the investors of government agencies and institutions do not require investment returns and investment recovery, but require funds to be used for designated purposes in accordance with the law or the wishes of the investors, funds are formed.
The change of fund price is mainly based on its net value. As long as the net value of the fund is increasing, its price will go up. The ratio of fund price to fund net value is called premium rate. The calculation formula of exchange fund premium rate is: (exchange price-exchange net value)/exchange net value * 100%.
When the transaction price of closed-end funds in the secondary market is lower than the actual net value, this situation is called "discount". Discount rate = (unit net share-unit market price)/unit net share. According to this formula, when the discount rate is greater than 0 (that is, the net value is greater than the market price), it is a discount, and when the discount rate is less than 0 (that is, the net value is less than the market price), the price is a premium.
In addition to investment objectives and management level, discount rate is also an important factor in evaluating closed-end funds. Foreign methods to solve the large discount of closed-end funds include: closing to opening, fund liquidation in advance, fund tender offer, fund share repurchase, fund management and distribution, etc.