What do fund discount and fund discount mean? Investment skills of graded fund b
What is a graded fund?
The graded fund divides the parent fund products into AB shares and gives different expected annualized expected income distribution. Class A share investors get a fixed expected annualized expected return every year, while Class B share investors enjoy the expected annualized expected return or bear residual risks after paying the expected annualized expected return agreed by Class A share.
Lever calculation of graded funds;
Share leverage = (Class A share+Class B share)/Class B share
Net leverage = (parent fund net value /B share net value) * share leverage
Price leverage = (parent fund net value /B share price) * share leverage
Stock leverage is usually fixed. The A4:6(B ratio of general stock-based graded funds is 5: 5: 5 (Class B double initial leverage) or 4: 6 (Class B double initial leverage), and that of bond-based graded funds is 7: 3 (Class B double leverage).
Because the price and net value of B share are constantly changing in the transaction, the net value and price leverage of graded funds will also be adjusted accordingly. The higher the leverage ratio, the higher the risk and the more aggressive it is.
Discount risk of graded funds:
After the fund has triggered the discount on T day, even if the B share has a daily limit on T+ 1, the discount cannot be stopped. Because trading can continue on this day, and there is no mark on the market disclosure, many "people who don't know the truth" mistakenly bought this "doomsday B" and may lose more than 40% in one day.