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The upward discount is a kind of irregular discount. According to the design of the tiered fund, when the net value of the tiered fund parent fund rises to a certain net value (such as 1.5), the tiered fund will be discounted upward. The upward discount is caused by the sharp increase in the index corresponding to the fund of funds. At this time, B's share increases and the leverage decreases. After the discount, the net value of AB shares will return to 1, and the part exceeding 1 will be distributed to the holders of AB shares in the form of a fund of funds. There are more discounts in bull markets.

The triggering condition for an upward discount is generally the net unit value of the fund of funds. In a bull market, when the net value of the fund of funds increases, the net value of share B also rises simultaneously. The ratio of its asset size to the asset size of share A will become larger and larger, and the leverage will become smaller and smaller until it is infinitely close to 1, or even ignored. This will obviously lose the charm of the B share. Through conversion, the net value of each share will be renormalized, and the leverage will be reloaded relative to a newly listed hierarchical fund.

Extended information:

Notes:

Upward discounting is an upward conversion, which is a form of irregular conversion. When the net value of the parent fund of a tiered fund rises to a certain price, the tiered fund will be discounted. Due to the sharp rise in the index corresponding to the parent base, the leverage decreased after B's share rose sharply.

After the discount, the net values ??of A shares and B shares will return to the initial net value of 1, and the portion exceeding 1 will be distributed to the holders of A shares and B shares in the form of parent funds.

The fixed discount means that after the end of each interest calculation cycle, the agreed income of share A will be converted into the parent fund, and investors can realize the income by redeeming the parent fund. Most occur at the end of each year and the beginning of the year, usually on the first working day of each year; or on the opening day after the fund completes one operating cycle.

Baidu Encyclopedia-Upward Discount

Baidu Encyclopedia-Funds